UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 000-56230

KONA GOLD BEVERAGE, INC.

(Exact name of registrant as specified in its charter)

Delaware

20-1915692

(State of

incorporation)

~~(I.R.S. Employer~~

~~Identification No.)~~

(I.R.S. Employer Identification No.)

746 North Drive, Suite A, Melbourne, Florida		32934
(Address of principal executive offices)		(Zip Code)

(844) 714-2224

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
	Common Stock			KGKG		OTC Markets Group Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the issuer’s common stock, par value $0.0001 per share, outstanding as of November ~~14, 2022~~13, 2023 was ~~1,841,368,987~~2,453,312,419.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		F-1

Item 1. Condensed Financial Statements		F-1

	Condensed Consolidated Balance Sheets – September 30, ~~2022~~2023 (Unaudited) and December 31, ~~2021~~2022		F-1

	Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022		F-2

	Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited) for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022		F-3

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September, ~~30,~~2023 and 2022 ~~and 2021~~		F-5

	Notes to Condensed Financial Statements (Unaudited)		F-6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1

Item 3. Quantitative and Qualitative Disclosures About Market Risk		14

Item 4. Controls and Procedures		14

PART II - OTHER INFORMATION		15

Item 1. Legal Proceedings		15

Item 1A. Risk Factors		15

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		15

Item 3. Defaults Upon Senior Securities		15

Item 4. Mine Safety Disclosures		15

Item 5. Other Information		15

Item 6. Exhibits		1516

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

KONA GOLD BEVERAGE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30, 2022

December 31, 2021

(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 270,793 $ 703,825
Accounts receivable, net of allowance for doubtful accounts of $20,661 and $11,926, respectively 56,105 15,993
Inventory, net of reserve for obsolescence of $150,000 and $150,000, respectively 1,007,879 574,811
Prepaids - 278,707
Other current assets 17,898 30,373
Total current assets 1,352,675 1,603,709

NON-CURRENT ASSETS
Property, plant and equipment, net 370,518 348,037
Right-of-use asset, net 823,635 966,955
Intangible property, net 68,639 75,955
Deposits 15,125 15,125
Total assets $ 2,630,592 $ 3,009,781

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,041,016 $ 541,123
Accrued compensation 159,583 329,583
Notes payable, net of discount of $155,281 and $0, respectively, current 479,260 7,974
Notes payable - related parties, current 1,787,151 6,000
Acquisition obligations, current 663,871 60,000
Lease liabilities, current 217,166 213,837
Convertible debt, net of discount of $564,416 and $2,150,067, respectively 530,584 849,933
Derivative liability 352,000 2,121,000
Total current liabilities 5,230,631 4,129,450

NON-CURRENT LIABILITIES
Notes payable - related parties, net of current - 1,525,651
Notes payable, net of current 71,749 25,338
Acquisition obligations, net of current - 615,317
Lease liabilities, net of current 677,866 838,883
Total liabilities 5,980,246 7,134,639

COMMITMENTS AND CONTINGENCIES - -

STOCKHOLDERS’ DEFICIT
Preferred Stock, $.00001 par value, 5,700,250 shares authorized, 988,000 and 988,000 issued and outstanding, respectively 10 10
Common Stock, $.00001 par value, 2,500,000,000 authorized, 1,806,458,236 and 1,004,709,546, issued and outstanding, respectively 18,065 10,047
Common stock issuable (170,000,000 and 170,000,000 shares) 1,386,497 1,386,497
Additional paid-in capital 17,688,091 10,778,761
Accumulated deficit (22,442,317 ) (16,300,173 )
Total stockholders’ deficit (3,349,654 ) (4,124,858 )
Total liabilities and stockholders’ deficit $ 2,630,592 $ 3,009,781

	September 30, 2023			December 31, 2022
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	369,931		$	39,788
Accounts receivable, net of allowance for doubtful accounts of $154,224 and $145,579, respectively		(120,288	)		79,529
Inventory, net of reserve for obsolescence of $80,000, respectively		333,990			859,179
Other current assets		50,306			45,262
Total current assets		633,939			1,023,758

NON-CURRENT ASSETS
Property, plant and equipment, net		279,134			348,064
Right-of-use asset, net		434,402			762,464
Intangible property, net		47,006			66,201
Deposits		7,100			15,125
Total assets	$	1,401,581		$	2,215,612

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,849,053		$	1,379,227
Accrued compensation		325,279			137,083
Notes payable, net of discount of $83,973 and $218,481, respectively, current		903,264			712,499
Notes payable - related parties, current		1,829,000			1,785,651
Notes payable
Acquisition obligations, current		652,788			659,550
Lease liabilities, current		178,074			209,685
Convertible debt, net of discount of $236,783 and $183,940, respectively		662,974			411,060
Total current liabilities		6,400,432			5,294,755

NON-CURRENT LIABILITIES
Notes payable, net of current		56,835			57,055
Lease liabilities, net of current		296,983			629,197
Total liabilities		6,754,250			5,981,007

COMMITMENTS AND CONTINGENCIES		-			-

STOCKHOLDERS’ DEFICIT
Preferred Stock, $.00001 par value, 5,702,000 shares authorized, 989,000 and 988,000 issued and outstanding, respectively		10			10
Common Stock, $.00001 par value, 10,500,000,000 authorized, 2,382,423,530 and 2,000,276,378, issued and outstanding, respectively		23,824			20,003
Common stock issuable (169,998,860 shares)		1,386,489			1,386,497
Additional paid-in capital		20,495,431			18,441,303
Accumulated deficit		(27,258,423	)		(23,613,208	)
Total stockholders’ deficit		(5,352,669	)		(3,765,395	)
Total liabilities and stockholders’ deficit	$	1,401,581		$	2,215,612

See notes to condensed consolidated financial ~~statements~~statements.

F-1

KONA GOLD BEVERAGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited)

													2023			2022			2023			2022
	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2022			2021			2022			2021			2023			2022			2023			2022
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)

REVENUES, NET	$	1,130,546		$	545,375		$	3,299,075		$	1,798,999		$	687,797		$	1,130,546		$	2,892,213		$	3,299,075
COST OF REVENUES		873,319			442,766			2,608,712			1,443,727			501,056			873,319			2,230,601			2,608,712
Gross profit		257,227			102,609			690,363			355,272			186,741			257,227			661,612			690,363

OPERATING EXPENSES
Selling, general and administrative expenses		1,075,044			756,110			3,045,895			1,968,841			656,607			1,075,044			2,858,287			3,045,895
LOSS FROM OPERATIONS		(817,817	)		(653,501	)		(2,355,532	)		(1,613,569	)		(469,866	)		(817,817	)		(2,196,675	)		(2,355,532	)
OTHER INCOME (EXPENSE)
Gain on extinguishment of debt														42,151			-			42,151			-
Gain on divestiture														345,619			-			345,619			-
Interest expense		(253,855	)		(817,471	)		(867,209	)		(2,013,337	)		(176,434	)		(253,855	)		(779,396	)		(867,209	)
Financing costs		-			-			(260,000	)		-			(5,173	)		-			(294,173	)		(260,000	)
Change in the fair value of derivative liability		148,000			(740,220	)		(1,523,000	)		(864,589	)		-			148,000			-			(1,523,000	)
Gain (loss) on extinguishment of debt		(268,810	)		-			(1,141,850	)		95,161			(256,792	)		(268,810	)		(770,312	)		(1,141,850	)
Other income (expense)		425			(19,523	)		5,447			(27,065	)		2,403			425			7,571			5,447
Total other income (expenses)		(374,240	)		(1,577,214	)		(3,786,612	)		(2,809,830	)

NET LOSS	$	(1,192,057	)	$	(2,230,715	)	$	(6,142,144	)	$	(4,423,399	)	$	(518,092	)	$	(1,192,057	)	$	(3,645,215	)	$	(6,142,144	)

NET LOSS PER COMMON SHARES:
Basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Basic and diluted		1,760,650,640			829,027,793			1,580,864,982			863,927,095			2,340,337,120			1,760,650,640			2,156,953,058			1,580,864,982

See notes to condensed consolidated financial ~~statements~~statements.

F-2

KONA GOLD BEVERAGE, INC.

~~CONDENSED CONSOLIDATED~~
STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Three Months Ended September 30, 2023

(Unaudited)

	Shares		Amount		Shares		Amount		Shares		Amount		in Capital		Deficit			Deficit
	Common Stock				Preferred Stock				Common Shares				Additional					Total
	$.00001 Par				$.00001 Par				Issuable				Paid		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		in Capital		Deficit			Deficit
Balance June 30, 2023		2,294,940,557	$	22,949		989,000	$	10		169,998,860	$	1,386,489	$	20,094,053	$	(26,740,331	)	$	(5,236,830	)
Common stock issued for conversion of convertible debt and accrued interest		70,000,000		700										314,300					315,000
Common stock issued for ELOC		17,482,973		175										78,498					78,673
Warrants related to convertible notes														8,580					8,580
Net loss		-		-		-		-		-		-		-		(518,092	)		(518,092	)
Balance September 30, 2023 (Unaudited)		2,382,423,530	$	23,824		989,000	$	10		169,998,860	$	1,386,489	$	20,495,431	$	(27,258,423	)	$	(5,352,669	)

For the Nine Months Ended September 30, 2023

(Unaudited)

	Common Stock				Preferred Stock				Common Shares						Additional						Total
	$.00001 Par				$.00001 Par				Issuable						Paid			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares			Amount			in Capital			Deficit			Deficit
Balance December 31, 2022		2,000,276,378	$	20,003		988,000	$	10		169,999,860		$	1,386,497		$	18,441,303		$	(23,613,208	)	$	(3,765,395	)
Common stock issued for conversion of convertible debt and accrued interest		269,500,000		2,695												1,201,055						1,203,751
Common stock issued for financing costs (LOC)		28,000,000		280												125,720						126,000
Common stock issued for ELOC		17,482,973		175												78,498						78,673
Warrants related to convertible notes																296,250						296,250
Warrants issued for financing costs (ELOC)																163,000						163,000
Common stock issued upon cashless exercise of warrants		67,164,179		671												(671	)					-
Preferred stock issued to a related party for common stock issuable						1,000		-		(1000	)		(8	)		185,008						185,000
Warrants related to services rendered																5,269						5,269
Net loss		-		-		-		-		-			-			-			(3,645,215	)		(3,645,215	)
Balance September 30, 2023 (Unaudited)		2,382,423,530	$	23,824		989,000	$	10		169,998,860		$	1,386,489		$	20,495,431		$	(27,258,423	)	$	(5,352,669	)

F-3

For the Three Months Ended September 30, 2022

(Unaudited)


	Common Stock				Preferred Stock				Common Shares				Additional					Total			Common Stock				Preferred Stock				Common Shares				Additional					Total
	$.00001 Par				$.00001 Par				Issuable				Paid-		Accumulated			Stockholders’			$.00001 Par				$.00001 Par				Issuable				Paid-		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		in Capital		Deficit			Deficit			Shares		Amount		Shares		Amount		Shares		Amount		in Capital		Deficit			Deficit
June 30, 2022		1,709,122,945	$	17,091		988,000	$	10		170,000,000	$	1,386,497	$	16,855,382	$	(21,250,260	)	$	(2,991,280	)		1,709,122,945	$	17,091		988,000	$	10		170,000,000	$	1,386,497	$	16,855,382	$	(21,250,260	)	$	(2,991,280	)

Common stock issued for conversion of convertible debt and accrued interest		97,335,291		974										609,709					610,683			97,335,291		974										609,709					610,683

Warrants related to convertible notes														223,000					223,000															223,000					223,000

Net loss								-				-				(1,192,057	)		(1,192,057	)		-		-		-		-		-		-		-		(1,192,057	)		(1,192,057	)

Balance September 30, 2022 (Unaudited)		1,806,458,236	$	18,065		988,000	$	10		170,000,000	$	1,386,497	$	17,688,091	$	(22,442,317	)	$	(3,349,654	)		1,806,458,236	$	18,065		988,000	$	10		170,000,000	$	1,386,497	$	17,688,091	$	(22,442,317	)	$	(3,349,654	)

For the Nine Months Ended September 30, 2022

(Unaudited)

Common Stock Preferred Stock Common Shares Additional Total
$.00001 Par $.00001 Par Issuable Paid- Accumulated Stockholders’
Shares Amount Shares Amount Shares Amount in Capital Deficit Deficit
Balance December 31, 2021 1,004,709,546 $ 10,047 988,000 $ 10 170,000,000 $ 1,386,497 $ 10,778,761 $ (16,300,173 ) $ (4,124,858 )
Common stock issued for conversion of convertible debt and accrued interest 775,748,690 7,758 6,462,090 6,469,848

Common stock issued with note payable recorded as debt discount 25,000,000 250 134,750 135,000

Common stock issued with employment agreement 1,000,000 10 8,490 8,500

Warrants related to convertible notes 304,000 304,000

Net loss - - (6,142,144 ) (6,142,144 )
Balance September 30, 2022 (Unaudited) 1,806,458,236 $ 18,065 988,000 $ 10 170,000,000 $ 1,386,497 $ 17,688,091 $ (22,442,317 ) $ (3,349,654 )

~~F-3~~

~~For the Three Months Ended September 30, 2021~~

~~(Unaudited)~~

Common Stock Preferred Stock Common Shares Additional Total
$.00001 Par $.00001 Par Issuable Paid- Accumulated Stockholders’
Shares Amount Shares Amount Shares Amount in Capital Deficit Deficit
June 30, 2021 850,772,637 $ 8,508 988,140 $ 10 170,000,000 $ 1,386,497 $ 7,473,822 $ (11,472,720 ) $ (2,603,883 )
Common stock issued for conversion of convertible debt and accrued interest 29,195,472 292 406,360 406,652

Common stock issued for compensation 3,100,000 31 55,769 55,800

Warrants related to convertible notes 693,555 693,555

Preferred stock conversion to common stock 140 - 140 - 3 (3 ) -

Net loss - (2,230,715 ) (2,230,715 )
Balance September 30, 2021 (Unaudited) 883,068,249 $ 8,831 988,280 $ 10 170,000,000 $ 1,386,497 $ 8,629,509 $ (13,703,438 ) $ (3,678,591 )

~~For the Nine Months Ended September 30, 2021~~

~~(Unaudited)~~

Common Stock Preferred Stock Common Shares Additional Total
$.00001 Par $.00001 Par Issuable Paid- Accumulated Stockholders’
Shares Amount Shares Amount Shares Amount in Capital Deficit Deficit
Balance December 31, 2020 786,308,041 $ 7,864 988,140 $ 10 170,000,000 $ 1,386,497 $ 5,028,012 $ (9,280,036 ) $ (2,857,653 )
Common stock issued for conversion of convertible debt and accrued interest 84,660,068 846 1,528,789 1,529,635

Common stock issued for compensation 3,100,000 31 55,769 55,800

Common stock issued for acquisition 9,000,000 90 270,810 270,900

Warrants related to convertible notes 1,746,126 1,746,126

Preferred stock conversion to common stock 140 - 140 - 3 (3 ) -

Net loss - (4,423,399 ) (4,423,399 )
Balance September 30, 2021 (Unaudited) 883,068,249 $ 8,831 988,280 $ 10 170,000,000 $ 1,386,497 $ 8,629,509 $ (13,703,438 ) $ (3,678,591 )

	Common Stock				Preferred Stock				Common Shares				Additional					Total
	$.00001 Par				$.00001 Par				Issuable				Paid-		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		in Capital		Deficit			Deficit
Balance December 31, 2021		1,004,709,546	$	10,047		988,000	$	10		170,000,000	$	1,386,497	$	10,778,761	$	(16,300,173	)	$	(4,124,858	)
Balance		1,004,709,546	$	10,047		988,000	$	10		170,000,000	$	1,386,497	$	10,778,761	$	(16,300,173	)	$	(4,124,858	)

Common stock issued for conversion of convertible debt and accrued interest		775,748,690		7,758										6,462,090					6,469,848

Common stock issued with note payable recorded as debt discount		25,000,000		250										134,750					135,000

Common stock issued with employment agreement		1,000,000		10										8,490					8,500

Warrants related to convertible notes														304,000					304,000

Net loss		-		-		-		-		-		-		-		(6,142,144	)		(6,142,144	)

Balance September 30, 2022 (Unaudited)		1,806,458,236	$	18,065		988,000	$	10		170,000,000	$	1,386,497	$	17,688,091	$	(22,442,317	)	$	(3,349,654	)
Balance		1,806,458,236	$	18,065		988,000	$	10		170,000,000	$	1,386,497	$	17,688,091	$	(22,442,317	)	$	(3,349,654	)

See notes to condensed consolidated financial ~~statements~~statements.

F-4

KONA GOLD BEVERAGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited)


	Nine Months Ended September 30,
	2022			2021			Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
CASH USED IN OPERATING ACTIVITIES:
Net loss	$	(6,142,144	)	$	(4,423,399	)	$	(3,645,215	)	$	(6,142,144	)
Adjustments to reconcile net loss to net cash provided by operations:
Depreciation and amortization		67,018			32,755			70,353			67,018
Right-of-use asset		143,320			(306,110	)
Change in allowance for doubtful accounts								8,645			35
Change in inventory reserves								-			-
Right-of-use asset amortization								79,792			143,320
Amortization of debt discount		702,675			-			631,542			702,675
Amortization of intangible assets		7,316			-			10,719			7,316
Change in allowance for doubtful accounts		35			-
Financing costs		260,000
Preferred stock issued for common stock issuable								185,000
Fair value of warrants issued for financing costs								367,673
Fair value of warrants issued for services								5,269			260,000
Loss on sale of property and equipment								(1,423	)		-
Gain on extinguishment of debt								(42,151	)		-
Loss on extinguishment of debt		1,141,855			-			728,056			1,141,855
Loss on change in the fair value of derivative liabilities		1,523,000			-
Interest expense related to warrants on convertible debt		-			1,746,126
Loss on termination of operating lease								9,601			-
Gain on change in fair value of derivative liabilities								-			1,523,000
Common stock issued for compensation		8,500			55,800			-			8,500
Common stock issued for acquisition		-			270,900
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		(40,147	)		(74,223	)		191,172			(40,147	)
Decrease (increase) in inventory		(433,068	)		(206,109	)		525,188			(433,068	)
Decrease (increase) in prepaids		278,707			(62,200	)		-			278,707
Decrease (increase) in other current assets		12,475			(945	)		(5,044	)		12,475
Decrease (increase) in deposits		-			(6,250	)		1,775			-
Increase (decrease) in accounts payable and accrued expenses		645,765			84,196			759,235			645,765
Increase (decrease) in accrued compensation		(170,000	)		132,083			188,195			(170,000	)
Increase (decrease) in derivative liability		-			864,589
Increase (decrease) in lease liability		(153,890	)		306,110			(97,106	)		(153,890	)
Net cash used in operating activities		(2,148,583	)		(1,586,677	)		(28,724	)		(2,148,583	)

CASH USED IN INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(42,923	)		(145,912	)
Changes in goodwill					(1,275,938	)
Purchase of purchase property, plant and equipment								-			(42,923	)
Changes in intellectual property		-			(5,256	)		8,475			-
Net cash used in investing activities		(42,923	)		(1,427,106	)
Net provided by investing activities								8,475			(42,923	)

CASH PROVIDED BY FINANCING ACTIVITIES:
Changes in line of credit - related party		-			(13,000	)
Proceeds from note payable - related party								222,000			260,000
Repayment of note payable - related party								(136,500	)		(4,500	)
Changes in acquisition obligations		(11,446	)		590,418			(6,762	)		(11,446	)
Principal repayments of finance lease obligation		(3,798	)		-			(5,594	)		(3,798	)
Proceeds from note payable – related party		260,000			-
Payment of note payable – related party		(4,500	)		(217,000	)
Proceeds from notes payable		542,000			34,763
Payments of notes payable		(5,598	)		-
Proceeds from notes payable, net of expenses								800,930			542,000
Repayment of notes payable								(1,251,656	)		(5,598	)
Proceeds from convertible debentures payable, net of expenses		981,816			3,029,636			727,974			981,816
Changes from PPP notes payable		-			22,326
Net cash provided by financing activities		1,758,474			3,447,143			350,392			1,758,474
Net cash increase (decrease) for period		(433,032	)		433,360			330,143			(433,032	)
Cash at beginning of period		703,825			113,168			39,788			703,825
Cash at end of period	$	270,793		$	546,528		$	369,931		$	270,793

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	-		$	27,065		$	-		$	-
Cash paid for interest	$	533		$	52,091		$	14,947		$	533

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Fair value of common shares issued as debt discount on note payable	$	135,000		$	-		$	-		$	135,000
Fair value of common shares issued on conversion of debentures and accrued interest	$	6,469,848		$	-
Termination of right of use asset							$	248,270		$	-
Termination of operating lease liability							$	261,125		$	-
Note payable issued on termination of lease liability							$	16,206		$	-
Vendor line of credit reclassified to notes payable							$	-		$	-
Common shares issued on conversion of debentures and accrued interest							$	315,000		$	6,469,848
Fair value of warrants issued upon issuance of convertible notes							$	296,250		$	-
Derivative liability recorded on issuance of convertible note	$	680,000		$			$	-		$	680,000
Note payable on vehicle purchase	$	46,576		$	-		$	-		$	46,576
Preferred stock conversion to common stock	$	-		$	3

See notes to condensed consolidated financial ~~statements~~statements.

F-5

KONA GOLD BEVERAGE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~

~~(Unaudited)~~2022

NOTE 1 – ~~BASIS OF PRESENTATION~~OPERATIONS AND ~~LIQUIDITY~~GOING CONCERN

The ~~accompanying interim condensed consolidated financial statements of~~Company was formerly known as Kona Gold ~~Beverages,~~Solutions, Inc. ~~(the “Company”~~, ~~“we”~~and in October 2020, changed its name to Kona Gold Beverage, Inc., ~~“us”,~~a Delaware corporation (“Kona Gold,” the “Company,” “we,” “us,” or “our”)~~, are unaudited, but in the opinion~~. As of ~~management contain all adjustments, including normal recurring adjustments, necessary to present fairly our financial position at~~ September 30, ~~2022,~~2023, the Company has three wholly-owned subsidiaries: Kona Gold LLC, a Delaware limited liability company (“Kona”), HighDrate LLC, a Florida limited liability company (“HighDrate”), and Gold Leaf Distribution LLC, a Florida limited liability company (“Gold Leaf”). Kona focuses on the ~~results~~development and marketing of ~~operations~~functional and ~~cash flows for~~better-for-you beverages: Ooh La Lemin Lemonades that are available in a variety of sparkling and non-sparkling flavors and Kona Gold Energy Drinks that are low-to-zero calorie functional beverages that are high in B vitamins, amino acids, and omegas. HighDrate focuses on the ~~nine months ended September 30, 2022,~~development and ~~2021. The balance sheet as~~marketing of ~~December 31, 2021, is derived from the Company’s audited financial statements.~~

Certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuantCBD-infused energy waters geared to the ~~rules~~fitness and ~~regulations~~wellness markets. Gold Leaf focuses on the distribution of ~~the Securities~~premium beverages and ~~Exchange Commission regarding interim financial reporting. We believe that the disclosures contained~~snacks in these condensed financial statements are adequate to make the information presented herein not misleading. For further information, refer to the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the Securities and Exchange Commission on April 13, 2022.key markets, all of which complement our current product offerings.

The ~~results~~Company currently sells its products through resellers, the Company’s websites, and distributors that span across 18 states. The Company’s products are available in wide variety of ~~operations for~~stores, including convenience and grocery stores, smoke shops, and gift shops.

As used herein, the ~~nine months ended September 30, 2022, are not necessarily indicative of~~terms “Kona Gold,” the ~~results of operations~~“Company,” “we,” “us,” or “our”, refer to ~~be expected for~~Kona Gold individually or, as the ~~full fiscal year ending December 31, 2022.~~context requires, collectively with its subsidiaries on a consolidated basis.

Effects of COVID-19

In January 2020, the WHO announced a global health emergency because of a new strain of coronavirus (known as COVID-19) that originated in Wuhan, China and generated significant risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in global exposure. The COVID-19 pandemic is disrupting businesses and affecting production and sales across a range of industries, as well as causing volatility in the financial markets. The extent of the impact of the COVID-19 pandemic on the Company’s consumer demand, sales, and financial performance will depend on certain developments, including, among other things, the duration and spread of the outbreak and the impact on the Company’s consumers and employees, all of which are uncertain and cannot be predicted. Management is actively monitoring this situation and potential impacts on our financial condition, liquidity, and results of operations.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, ~~during~~in the nine months ended September 30, ~~2022,~~2023, the Company recorded a net loss of $~~6,142,144~~3,645,215 and cash used ~~cash~~ in operations of $~~2,148,583~~28,724 and had a stockholders’ deficit of $~~3,349,654~~5,352,669 as of that date. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the financial statements being issued. In addition, the Company’s independent registered public accounting firm, in its report on our December 31, 2022 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2021, has also expressed substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At September 30, ~~2022,~~2023, the Company had cash on hand in the amount of $~~270,793~~369,931. ~~Subsequent to September 30, 2022, the Company raised an additional $250,000~~ ~~through the sale of a secured promissory note. The Company believes it has sufficient cash and working capital to sustain operations through December 31, 2022.~~ The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case or equity financing.

F-6

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements ~~are unaudited and~~ include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. These ~~unaudited~~ consolidated financial statements have been prepared on the accrual basis of accounting and in accordance with generally accepted accounting principles (“GAAP”) in the United States.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts receivable, assumptions used in valuing inventories at net realizable value, impairment testing of recorded long-term tangible and intangible assets, the valuation allowance for deferred tax assets, accruals for potential liabilities, assumptions made in valuing stock instruments issued for services, and assumptions used in valuing warrant liabilities, and assumptions used in the determination of the Company’s liquidity.

Accounts Receivable

Accounts receivable are generally recorded at the invoiced amounts net of an allowance for expected losses. The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding.

The allowance for accounts receivable is established through a provision reducing the carrying value of receivables. At September 30, 2023 and December 31, 2022, the allowance was $154,224 and $145,579, respectively.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (“ASC 606”). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.

Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon shipment from our facilities. The Company’s performance obligations are satisfied at that time. The Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer.

F-7

All of the Company’s products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them.

The Company does not allow for returns, except for damaged products when the damage occurred pre-fulfillment. Damaged product returns have historically been insignificant. Because of this, the stand-alone nature of our products, and our assessment of performance obligations and transaction pricing for our sales contracts, we do not currently maintain a contract asset or liability balance for obligations. We assess our contracts and the reasonableness of our conclusions on a quarterly basis.

Sales are made to customers under terms allowing certain limited rights of return. The Company records an allowance ~~and return~~for returns for each quarter for 3% of total sales. The Company recorded an allowance for sales return ~~and allowance for~~at the three months ending September 30, 2023 and 2022 ~~and 2021~~ of approximately $~~32,700~~26,500 and $~~16,100, respectively, and the Company recorded sales return, and allowance for the nine months ending September 30, 2022 and 2021 of $104,500~~ ~~and $43,459~~32,700, respectively, which is ~~included in the revenues, net of sales returns and allowances~~netted against revenue in the accompanying ~~Condensed~~ Consolidated Statements of ~~Operations.~~Loss.

~~F-7~~

The following table presents our net revenues, by revenue source, and the period-over-period percentage change, for the period presented:

SCHEDULE OF NET REVENUES BY REVENUE ~~SOURCE~~

	Three Months Ended September 30,									Three Months Ended September 30,
	2022			2021						2023			2022
Revenue Source	Revenue			Revenue			% Change			Revenue			Revenue			% Change
Distributors	$	223,849		$	150,929			48	%	$	69,317		$	223,849			(69	)%
Amazon and Walmart Marketplace		30,334			41,669			(27	)%
Amazon											6,910			30,334			(77	)%
Online Sales		7,998			17,678			(55	)%		7,710			7,998			(4	)%
Retail		897,549			347,247			159	%		629,155			897,549			(30	)%
Shipping		3,516			4,451			(21	)%		1,205			3,516			(66	)%
Sales Returns and Allowances		(32,700	)		(16,599	)		97	%		(26,500	)		(32,700	)		(19	)%
Net Revenues	$	1,130,546		$	545,375			107	%	$	687,797		$	1,130,546			(39	)%

	Nine Months Ended September 30,									Nine Months Ended September 30,
	2022			2021						2023			2022
Revenue Source	Revenue			Revenue			% Change			Revenue			Revenue			% Change
Distributors	$	635,605		$	784,023			(19	)%	$	384,416		$	635,605			(40	)%
Amazon and Walmart Marketplace		110,478			119,428			(7	)%
Amazon											31,828			110,478			(71	)%
Online Sales		30,494			57,725			(47	)%		17,965			30,494			(41	)%
Retail		2,616,679			883,825			196	%		2,545,841			2,616,679			(3	)%
Shipping		10,319			15,039			(31	)%		3,163			10,319			(69	)%
Sales Returns and Allowances		(104,500	)		(61,041	)		71	%		(91,000	)		(104,500	)		(13	)%
Net Revenues	$	3,299,075		$	1,798,999			83	%	$	2,892,213		$	3,299,075			(12	)%

The following table presents our net revenues by product lines for the period presented:

	Three Months Ended September 30,									Three Months September 30,
	2022			2021						2023			2022
Product Line	Revenue			Revenue			% Change			Revenue			Revenue			% Change
Hemp Energy Drinks	$	25,743		$	123,770			(79	)%
Energy Drinks										$	4,327		$	25,743			(83	)%
CBD Energy Waters		13,686			28,491			(52	)%		14,604			13,686			7	%
Lemonade Drinks		222,689			57,911			285	%		65,006			222,689			(71	)%
Apparel		63			104			(39	)%		-			63			(100	)%
Retail		897,549			347,247			159	%		629,155			897,549			(30	)%
Shipping		3,516			4,451			(21	)%		1,205			3,516			(66	)%
Sales returns and allowance		(32,700	)		(16,599	)		97	%		(26,500	)		(32,700	)		(19	)%
Net Revenues	$	1,130,546		$	545,375			107	%	$	687,797		$	1,130,546			(39	)%

F-8

	Nine Months Ended September 30,									Nine Months September 30,
	2022			2021						2023			2022
Product Line	Revenue			Revenue			% Change			Revenue			Revenue			% Change
Hemp Energy Drinks	$	148,725		$	316,124			(53	)%
Energy Drinks										$	16,749		$	148,725			(89	)%
CBD Energy Waters		56,388			75,096			(25	)%		36,329			56,388			(36	)%
Lemonade Drinks		571,285			568,624			-	%		381,131			571,285			(33	)%
Apparel		179			1,332			(87	)%		-			179			(100	)%
Retail		2,616,679			883,825			196	%		2,545,841			2,616,679			(3	)%
Shipping		10,319			15,039			(31	)%		3,163			10,319			(69	)%
Sales returns and allowance		(104,500	)		(61,041	)		71	%		(91,000	)		(104,500	)		(13	)%
Net Revenues	$	3,299,075		$	1,798,999			83	%	$	2,892,213		$	3,299,075			(12	)%

~~Loss per Common Share~~Advertising Costs

Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common sharesAdvertising costs are ~~excluded from the computation when their effect is antidilutive.~~expensed as incurred and are included in selling and marketing expense. Advertising costs aggregated $98,351 and $118,807for nine months ending September 30, 2023 and 2022, respectively.

For the period ended September 30, 2022 and 2021, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have had an anti-dilutive effect. The potentially dilutive securities consisted of the following:

~~SCHEDULE OF POTENTIAL DILUTIVE SECURITIES~~

September 30, 2022

September 30, 2021

Warrants 278,333,333 170,000,000
Common stock equivalent of Series B Convertible Preferred Stock 488,000 488,000
Common stock equivalent of Series C Convertible Preferred Stock - 140
Common stock equivalent of Series D Convertible Preferred Stock 500,000 500,000
Common stock issuable 169,999,860 170,000,000
Common stock on convertible debentures and accrued interest 333,838,293 209,812,295
Total 783,159,486 550,800,435
Stock Compensation Expense

The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. The Company recognizes the fair value of stock-based compensation within its Statements of Operations with classification depending on the nature of the services rendered.

The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.

~~Advertising Costs~~Loss per Common Share

~~Advertising costs~~Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are ~~expensed as incurred and are included in selling and marketing expense. Advertising costs for~~excluded from the computation when their effect is antidilutive.
For the nine months ~~ended~~ending September 30, 2023 and 2022, the calculations of basic and ~~2021, were $118,807~~ ~~and $45,700, respectively.~~diluted loss per share are the same because potential dilutive securities would have had an anti-dilutive effect. The potentially dilutive securities consisted of the following:
SCHEDULE OF POTENTIAL DILUTIVE SECURITIES

September 30,
2023

September 30,
2022

Warrants 448,859,099 278,333,333
Common stock equivalent of Series B Convertible Preferred Stock 488,000 488,000
Common stock equivalent of Series C Convertible Preferred Stock 1,000 -
Common stock equivalent of Series D Convertible Preferred Stock 500,000,000 500,000
Common stock issuable 169,998,860 169,999,860
Restricted common stock 9,600,000 333,838,293
Common stock on convertible debentures and accrued interest 1,228,147,778 783,159,486
Total 2,357,094,737 278,333,333
Anti-dilutive Shares 2,357,094,737 278,333,333
F-9
Fair Value of Financial Instruments
The Company uses various inputs in determining the fair value of its financial assets and liabilities and measures these assets on a recurring basis. Financial assets recorded at fair value are categorized by the level of subjectivity associated with the inputs used to measure their fair value. Accounting Standards Codification Section 820 defines the following levels of subjectivity associated with the inputs:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.
Level 3—Unobservable inputs based on the Company’s assumptions.
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of capital lease obligations and long-term financing obligations approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.

Segments
During the 2022 fiscal year, the Company consolidated and restructured its operations. The Company now operates in one segment for the manufacture and distribution of our products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements.
Concentrations

The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Generally, the Company’s policy is to minimize borrowing costs by immediately applying cash receipts to borrowings against its credit facility. From time to time, however, the Company may be exposed to risk for the amounts of funds held in bank accounts in excess of the FDIC limit. To minimize the risk, the Company’s policy is to maintain cash balances with high quality financial institutions.

Gross sales. During the three and nine months ended September 30, 2023 and 2022, ~~the Company reported~~ no customers ~~that~~ accounted for more than 10% of ~~gross sales. During the three months ended September 30, 2021, the Company reported one customer represented~~ 12~~% of the Company’s gross sales. During the nine months ended September 30, 2022, the Company reported no customers that accounted for more than~~ 10~~% of gross sales. During the nine months ended September 30, 2021, the Company reported one customer represented~~ 13~~% of the Company’s~~ gross sales.

Accounts receivable. As of September 30, ~~2022, the Company had six customers that accounted for~~ 80~~% of its gross accounts receivable. As of December 31, 2021,~~2023, the Company had accounts receivable from two customers that comprised 6012% and 10%, respectively, of its gross accounts receivable. As of December 31, 2022, the Company had accounts receivable from two customers that comprised 27% and 20%, respectively, of its gross accounts receivable.

Co-Packers. The raw materials used in the production of the Company’s products are obtained by the Company’s co-packers and consist primarily of materials such as the flavors, caffeine, sugars or sucralose, taurine, vitamins, CBD, and hemp seed protein contained in its beverages, the bottles in which its beverages are packaged, and the labeling on the outside of its beverages. These principal raw materials are subject to price and availability fluctuations. The Company currently relies on a few key co-packers, which in turn rely on a few key suppliers. The Company continually endeavors to have back-up co-packers, which co-packers would in turn depend on their third-party suppliers to supply certain of the flavors and concentrates that are used in the Company’s beverages. The Company is also dependent on these co-packers to negotiate arrangements with their existing suppliers that would enable the Company to obtain access to certain of such concentrates or flavor formulas under certain extraordinary circumstances. Additionally, in a limited number of cases, the Company’s co-packers may have contractual restrictions with their suppliers or the Company’s co-packers may need to obtain regulatory approvals and licenses that may limit the co-packers’ ability to enter into agreements with alternative suppliers. Contractual restrictions in the agreements the Company has with certain distributors may also limit the Company’s ability to enter into agreements with alternative distributors. The Company believes that a satisfactory supply of co-packers will continue to be available at competitive prices, although there can be no assurance in this regard. ~~The~~With respect to Gold Leaf’s operations, the Company continually endeavors to contract with additional beverage vendors to ensure the Company has adequate inventory. The Company believes that a satisfactory supply of vendors will continue to be available at competitive prices, although there can be no assurance in this regard.

Purchases from vendors. During the ~~nine~~three months ended September 30, ~~2022,~~2023, the Company’s ~~one vendor~~largest three vendors accounted for approximately 3355%, 12%, and 10% of all purchases, respectively. During the ~~nine months~~year ended ~~September 30, 2021,~~December 31, 2022, the Company’s largest ~~three vendors~~one vendor accounted for approximately 17%, 14~~%, and~~ 1134% of all purchases, respectively.

Accounts payable. As of September 30, 2023, two vendors accounted for more than 10% the total accounts payable. The Company’s largest two vendors accounted for 29%, and 17% of the total accounts payable, respectively. As of December 31, 2022, two vendors accounted for more than 4910% the total accounts payable. The Company’s largest two vendors accounted for 26~~% and~~ 23~~% of the total accounts payable, respectively. As of December~~ 31 ~~2021, four vendors accounted for more than 10% the total accounts payable. The Company’s largest four vendors accounted for~~ 20%, 14%, 12%, and 1118% of the total accounts payable, respectively.

~~Fair Value of Financial Instruments~~
The Company uses various inputs in determining the fair value of its financial assets and liabilities and measures these assets on a recurring basis. Financial assets recorded at fair value are categorized by the level of subjectivity associated with the inputs used to measure their fair value. Accounting Standards Codification Section 820 defines the following levels of subjectivity associated with the inputs:
~~Level 1—Quoted prices in active markets for identical assets or liabilities.~~
~~Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.~~
~~Level 3—Unobservable inputs based on the Company’s assumptions.~~
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of capital lease obligations and long-term financing obligations approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.
F-10

~~Segments~~
~~The Company operates in~~ ~~one~~ segment for the manufacture and distribution of our products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in economic characteristics, nature of products and services, and procurement, manufacturing, and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements.
Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for the Company beginning January 1, 2023, and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows.

Other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

NOTE 3 – DIVESTITURE
Proceeds from disposals during the nine months ended September 30, 2023 totaled $500,000, which primarily related to sales of our ownership interests in sparkling and non-sparkling Ooh La Lemin Lemonades.
NOTE 4 –INVENTORY

Inventory is valued at the lower of cost (first-in, first-out) or net realizable value, and net of reserves is comprised of the following:

SCHEDULE OF INVENTORY

September 30, 2022

December 31, 2021

September 30,
2023

December 31,
2022

Raw materials $ 263,418 $ 70,592 $ 70,915 $ 198,605
Finished goods, net 744,461 504,219 263,075 660,574
Total $ 1,007,879 $ 574,811 $ 333,990 $ 859,179

At September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, inventory presented above is net of a reserve for slow moving and potentially obsolete inventory of $~~150,000~~80,000 ~~and $150,000~~, respectively.

NOTE 45 – PROPERTY, PLANT AND EQUIPMENT

Property and equipment is comprised of the following:
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

September 30, 2022

December 31, 2021

Furniture and Fixtures $ 79,965 $ 75,070
Computers and Software 33,191 29,196
Machinery & Equipment 116,754 108,799
Vehicles 311,747 239,093
Total cost 541,657 452,158
Accumulated depreciation (171,139 ) (104,121 )
Property, plant and equipment, net $ 370,518 $ 348,037
~~F-11~~

September 30,
2023

December 31,
2022

Furniture and Fixtures $ 78,944 $ 78,134
Computers and Software 36,667 36,667
Machinery & Equipment 118,616 118,003
Vehicles 310,348 310,348
Total cost 544,575 543,152
Accumulated depreciation (265,441 ) (195,088 )
Property, plant and equipment, net $ 279,134 $ 348,064

Depreciation ~~expense~~for the nine months ended September 30, 2023 and 2022, was $72,982 and $67,018 respectively, and is included in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Loss. ~~For the nine months ended September 30, 2022 and 2021, depreciation expense was $67,018~~ ~~and $32,755, respectively.~~
~~NOTE 5 –~~ ~~ACQUISITION OF S AND S BEVERAGE, INC.~~
On January 21, 2021, the Company entered into an Agreement and Plan of Merger with S and S Beverage, Inc. (“S and S”) and its shareholders and acquired all of the capital stock of S and S. In consideration thereof, the Company issued to them an aggregate of ~~nine million~~ restricted shares of Kona Gold Beverage, Inc.’s common stock (the “Acquisition Stock”). The Company did not grant them any registration rights in respect of the shares of Acquisition Stock. The Company also agreed to pay an aggregate of $~~1,050,000~~ ~~(the “Aggregate Acquisition Payments”), the majority of which is allocated to certain creditors of S and S (including one of the S and S’s legacy shareholders) and $89,249~~ ~~was allocated and paid to the five S and S legacy shareholders on a pro rata basis. The Company paid $400,000~~ of the Aggregate Acquisition Payments at the closing of the transaction. The remaining Aggregate Acquisition Payments are scheduled to be paid in monthly installments, in arrears on the tenth calendar day of each month, commencing on March 10, 2021, at a rate equivalent to $~~2.00~~ per case of Lemin Superior Lemonade (the product line of S and S that we have now branded as Ooh La Lemin) that we sell until the Aggregate Acquisition Payments have been paid in full. The acquisition obligation balance was $~~675,317~~ ~~at December 31, 2021. During the nine months ended September 30, 2022, the Company paid $11,446~~ ~~of the remaining Aggregate Acquisition Payments, leaving an acquisition obligation balance of $663,871~~ ~~at September 30, 2022, which is currently due.~~
~~Proforma information for the three- and nine-month period ended September 30, 2021 has been omitted as the operations of S and S prior to the acquisition were de minimis.~~

NOTE 6 – INTANGIBLE ASSETS

Intangible asset consisted of the following:
SCHEDULE OF INTANGIBLE ASSET

September 30, 2022

December 31, 2021

September 30,
2023

December 31,
2022

Intangible Assets
Trademarks $ 85,340 $ 85,340 $ 81,750 $ 85,340
Website development 12,200 12,200 - 12,200
Accumulated amortization (28,901 ) (21,585 ) (34,744 ) (28,901 )
Total Intangible Assets, net of amortization $ 68,639 $ 75,955 $ 47,006 $ 68,639

During the nine months ended September 30, 2023 and 2022, the Company recorded amortization expense of $7,316., respectively. The following table summarizes the amortization expense to be recorded in future periods for intangible assets that are subject to amortization:
SCHEDULE OF ESTIMATED FUTURE AMORTIZATION EXPENSE
Year Ending Amortization Amortization
2022 (remaining) $ 2,438
2023 9,754
2023 (remaining) $ 2,044
2024 9,754 8,175
2025 9,754 8,175
2026 9,754 8,175
2027 8,175
Thereafter 27,185 12,262
Total $ 68,639 $ 47,006

~~F-12~~F-11
NOTE 7 – NOTES PAYABLE – RELATED PARTIES

Notes payable with related parties consists of the following at September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:
SCHEDULE OF NOTES PAYABLE RELATED PARTY

September 30, 2022

December 31, 2021

September 30,
2023

December 31,
2022

Note payable – related party (a) $ 1,352,651 $ 1,352,651
Note payable – related party (b) 260,000 -
Note payable – related party – past due (c) 125,500 125,500
Note payable – related party (d) 49,000 53,500
Note payable – related party (a) $ 1,310,500 $ 1,352,651
Note payable – related party (b) 345,000 260,000
Note payable – related party (c) 125,500 125,500
Note payable – related party (d) 48,000 47,500
Total notes payable – related parties 1,787,151 1,531,651 $ 1,829,000 $ 1,785,651
Notes payable – related parties, current portion (1,787,151 ) (6,000 )
Notes payable – related parties, net of current portion $ - $ 1,525,651

(a) On April 4, 2019, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $1,500,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on April 4, ~~2023~~2024, at which time all outstanding principal amounts and accrued interest are due and payable. During the nine months ending September 30, 2023, Mr. Clark absolved $42,151. At September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, outstanding principal was $~~1,352,651~~1,310,500 and $1,352,651, respectively.

(b) On May 6, 2022, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $300,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on May 6, ~~2023~~2024, at which time all outstanding principal amounts and accrued interest are due and payable. During the period ended September 30, 2023, Mr. Clark made additional advances of $217,000, and $132,000 of that was repaid by the end of the period. At September 30, 2023 and December 31, 2022, ~~the~~ outstanding principal was $345,000 and $260,000., respectively.

(c) On August 29, 2019, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $200,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on August 29, 2023, at which time all outstanding principal amounts and accrued interest are due and payable. At September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, outstanding principal was $125,500 and $125,500, respectively.

(d) On February 19, 2019, the Company issued an unsecured Standard Promissory Note in Favor of Robert Clark, as lender, in the original principal amount of $70,000. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The note bears no interest. Principal payments of $500 per month commenced in March 2019, with final payment due in March 2021. On March 15, 2022, the Company issued an Amendment to the original issued Standard Promissory Note in Favor of Robert Clark for the remaining outstanding principal of $58,000. On April 3, 2023, the Company issued an Amendment to the original issued Standard Promissory Note in Favor of Robert Clark for the remaining outstanding principal of $46,000Principal payment of $500 per month, with final payment due in March ~~2023~~2024. The outstanding principal balance of this note at December 31, ~~2021~~2022 was $~~53,500~~47,500. During the nine months ended September 30, ~~2022,~~2023, the Company received an additional amount of $5,000 and made principal payments of $4,500, leaving an outstanding principal balance of $~~49,000~~48,000 at September 30, ~~2022.~~2023.

At December 31, ~~2021,~~2022, accrued interest on notes payable to related parties was $~~95,873~~153,959. During the nine months ended September 30, ~~2022,~~2023, the Company added $~~31,035~~49,551 of additional accrued interest, leaving an accrued interest balance on the notes payable to related parties of $~~126,908~~203,510 at September 30, ~~2022.~~2023. Accrued interest is included in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheets.

~~F-13~~F-12
NOTE 8 – NOTES PAYABLE

Notes payable consists of the following at September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:
SCHEDULE OF NOTES PAYABLE

September 30, 2022

December 31, 2021

September 30,
2023

December 31,
2022

Note payable (a) $ 28,606 $ 33,312
Note payable (b) 46,576 -
Note payable (c) 41,108 -
Note payable (d) 340,000 -
Note payable (e) 250,000 -
Less debt discount (e) (155,281 ) -
Note payable (a) $ 22,025 $ 26,994
Note payable (b) 39,730 44,550
Note payable (c) 39,261 40,103
Note payable (d) 205,576 250,000
Note payable (e) 291,043 626,388
Note payable (f) 62,857 -
Note payable (g) 77,968 -
Note payable (h) - -
Note payable (i) 289,406 -
Note payable (j) 16,206 -
Total notes payable 1,044,072 988,035
Less debt discount (83,973 ) (218,481 )
Total notes payable, net 551,009 33,312 960,099 769,554
Notes payable, current portion (479,260 ) (7,974 ) (903,264 ) (712,499 )
Notes payable, net of current portion $ 71,749 $ 25,338 $ 56,835 $ 57,055

(a) On August 21, 2021, the Company financed the purchase of a vehicle for $34,763, after making a down payment of $20,000. The loan term is for 60 months, annual interest rate of 5.44%, with monthly principal and interest payments of $665, and secured by the purchased vehicle. At December 31, ~~2021,~~2022, the loan balance was $~~33,312~~26,994. During the nine months ended September 30, ~~2022,~~2023, the Company made principal payments of $~~4,706~~4,969, leaving a loan balance of $~~28,606~~22,025 at September 30, ~~2022, of which $1,587~~ ~~was recorded as the current portion of loan payable on the accompanying Condensed Consolidated Balance Sheet.~~2023.
(b) On September 30, 2022, the Company financed the purchase of a vehicle for $46,576, after making a down payment. The loan term is for 60 months, annual interest rate of 9.44%, with monthly principal and interest payments of $980, and secured by the purchased vehicle. ~~As of~~At December 31, 2022, the loan balance was $44,550. During the nine months ended September 30, ~~2022,~~ no2023, the Company made principal payments ~~were made,~~of $4,820, leaving a loan balance of $~~46,576~~39,730 at September 30, ~~2022, of which $1,846~~ ~~was recorded as the current portion of loan payable on the accompanying Condensed Consolidated Balance Sheet.~~2023.

(c) In April 2021, the Company entered into a Line of Credit Agreement with Wells Fargo Bank. The Line of Credit is personally guaranteed by Robert Clark, the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $42,000. Advances under this line of credit bear interest at the rate of 11.50 ~~percent~~% per annum. The line of credit matures in 2023, at which time all outstanding principal amounts and accrued interest are due and payable. AtAs of September 30, 2023 and December 31, 2022, the outstanding principal was $~~41,108~~39,261 and $40,103, respectively, which was recorded as the current portion of loan payable on the accompanying ~~Condensed~~ Consolidated Balance Sheet.
(d) On September 30, 2022, the Company entered into a secured non-interest bearing advance agreement with an unaffiliated third party for the purchase of future receipts/revenues. Under the agreements, the Company received a lump sum payment of $~~250,000, and in return, the lender receives a secured right to collect a fix sum of future receipts/revenue of $340,000~~ to be collected by the Company. In accordance with the agreement, the Company agreed to sell, assign and transfer to the Purchaser of all the Company’s payments, receipts, settlements and funds paid to or received by or for the account of the Company from time to time on and after the date hereof in payment or settlement of the Company’s existing and future accounts, payment intangibles, credit, debit and/or stored value card transactions, contract rights and other entitlements arising from or relating to the payment of monies from the Company’s customers and/or other payors or obligors. The loan is payable in weekly payments of $~~7,728~~, is secured by these assets described above, and is guaranteed by Robert Clark, the Company’s Chief Executive Officer. Upon execution of the advance and receipt of funds, the Company recorded the difference of $~~90,000~~ ~~between the cash collected and the face amount of the note as a note discount, and will amortize the note discount as interest expense over the life of the advance.~~
~~(e)~~ On March 25, 2022, the Company entered into a secured debenture with an otherwise unaffiliated individual in the principal amount of $250,000. that was due on March 23, 2023. On March 23, 2023, the Company entered into a First Amendment to Secured Debenture (the “First Amendment”) to amend a Secured Debenture (the “Debenture”), dated as of March 25, 2022. The ~~secured note payable matures on~~Debenture is amended and restated in its entirety with the following terms (i) maturity date was extended to March 24, ~~2023~~2024; (ii) interest accrues on the outstanding principal at a rate equal to 12% per annum; (iii) monthly payments of principal and interest shall be made in the amount of $22,212, ~~and bears~~starting April 24, 2023 until the maturity date, at which date the entirety of the balance of principal plus interest ~~at the rate of~~ ~~0.97~~ ~~percent per annum.~~is due. The secured debenture is secured by nine ~~(9)~~ identified motor vehicles of the Company. At December 31, 2022, the outstanding balance of the secured debentures amounted to $250,000. During the nine months ended September 30, 2023, the Company made principal payments of $44,424, leaving a loan balance of $ 205,576 at September 30, 2023.
In connection with the issuance of the original debenture in 2022, the Company issued to the lender 25 million shares of the Company’s common stock at a price of $0.004 per share. The Company determined the fair value of the 25 million shares was $135,000, which was recorded as a debt discount against the secured debenture. ~~As of September 30,~~At December 31, 2022, ~~the outstanding balance of the secured debentures amounted to $250,000~~ ~~and~~ the unamortized debt discount was $~~65,281~~31,531. During the nine months ended September 30, 2023, the Company amortized debt discount of $31,531 to interest expense on the loan, leaving no remaining unamortized debt discount at September 30, 2023.
F-13
(e)
During the year ended December 31, 2022, the Company entered into secured non-interest-bearing advance agreements with unaffiliated third parties for the purchase of future receipts/revenues. Under the agreements, the Company received an aggregate lump sum payment of $561,957, and, in return, the purchaser received a secured right to collect a fix sum of future receipts/revenue of $798,456 to be collected by the Company. During the nine months ended September 30, 2023, the Company entered into additional secured non-interest bearing advance agreements for which the Company received an aggregate lump sum payment of $501,000, and, in return, the purchaser received a secured right to collect a fix sum of future receipts/revenue of $597,500 to be collected by the Company. In accordance with the agreements, the Company agreed to sell, assign, and transfer to the purchaser of all the Company’s payments, receipts, settlements, and funds paid to or received by or for the account of the Company from time to time on and after the dates of the agreements in payment or settlement of the Company’s existing and future accounts, payment intangibles, credit, debit, and/or stored value card transactions, contract rights, and other entitlements arising from or relating to the payment of monies from the Company’s customers and/or other payors or obligors. The agreements require aggregate daily to weekly payments ranging from $1,291 to $1,958 The Company’s obligations under the agreements are secured by the assets described above, and guaranteed by Robert Clark, the Company’s Chief Executive Officer. As of December 31, 2022, the outstanding balance to be paid amounted to $626,388. During the nine months ended September 30, 2023, the Company entered into additional agreements of $586,750, and made payments of $922,096, leaving an aggregate outstanding amount to be paid of $291,043 at September 30, 2023.
During the year ended December 31, 2022, upon execution of the advance and receipt of funds, the Company recorded the difference of $236,499 between the cash collected and the face amount of the obligation as a “note discount” and will amortize the “note discount” as interest expense over the life of the advance. At December 31, 2022, the unamortized “note discount” was $186,950. During the nine months ended September 30, 2023, the recorded an additional unamortized “note discount” of $191,150 related to new advance agreements, and the Company amortized “note discount” of $294,127 to interest expense on the obligation. As of September 30, 2023, the unamortized “note discount” was $83,973.
(f) On March 9, 2023, the Company entered into a Line of Credit Agreement with American Express National Bank. The Line of Credit is personally guaranteed by Robert Clark, the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $85,000. Advances under this line of credit bear interest at the rate of 19.32% per annum. The line of credit matures on September 9, 2024, at which time all outstanding principal amounts and accrued interest are due and payable. The line of credit requires minimum monthly payments of $5,572. At September 30, 2023, the outstanding principal was $62,857.
(g) On March 7, 2023, the Company entered into a Line of Credit Agreement with Celtic Bank. The Line of Credit is personally guaranteed by Robert Clark, the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $200,000. Advances under this line of credit bear interest at the rate of 35.90 percent per annum. The line of credit matures on March 7, 2024, at which time all outstanding principal amounts and accrued interest are due and payable. At September 30, 2023, the outstanding principal was $77,968.
(h) On June 30, 2023, the Company entered into a note payable with IQ Financial, Inc. in the principal amount of $110,000, with an original issue discount of $10,000, resulting in net proceeds for $100,000. The note has no stated interest and is due on July 31, 2023. For so long as the note remains unpaid, the Company shall pay within two days of receipt of customer payments on specific customer invoices listed in the note payable. At September 30, 2023, there was no outstanding balance.
The original issue discount of $10,000 was recorded as a debt discount against the note payable, at September 30, 2023, there was no remaining unamortized debt discount.
(i) On May 15, 2023, the Company entered into a Revolving Credit Agreement (the “Revolver”) with a vendor. The Revolver allows the Company to purchase goods from its vendor time to time. The unpaid principal balance of the Revolver may not exceed $250,000 through May 31, 2023, $225,000 through July 31, 2023, and $200,000 through $200,000 through December 31, 2023, at any one time. The Revolver has a maturity date of December 31, 2023 and bears no interest rate. At September 30, 2023, the outstanding balance of the Revolver was $289,406.
In connection with the issuance of the Revolver, the Company issued to the vendor 28 million shares of the Company’s common stock at a price of $0.0045 per share. The Company determined the fair value of the 28 million shares was $126,000, which was recorded as financing costs in the ~~current portion~~condensed consolidated statement of ~~loan payable on~~operations during the ~~accompanying Condensed Consolidated Balance Sheets.~~nine months ended September 30, 2023.
~~F-14~~(j) On June 2, 2023, the Company entered into a note payable with RFMD-LLC in the principal amount of $16,206, with an interest rate of 8% per annum, and a maturity date of December 31, 2023. The note was issued in related to the termination of an operating lease (see Note 10). At September 30, 2023, the outstanding principal was $16,206. original issue discount of $10,000, resulting in net proceeds for $100,000. The note has no stated interest and is due on July 31, 2023. For so long as the note remains unpaid, the Company shall pay within two days of receipt of customer payments on specific customer invoices listed in the note payable.
At December 31, ~~2021, there was~~ no2022 on item (d), accrued interest on the notes ~~payable.~~payable was $1,874. During the nine months ended September 30, ~~2022,~~2023, the Company added $~~1,262~~11,795 of additional accrued interest on item (d), leaving $~~1,262~~13,669 of accrued interest balance on the notes payable item (d) at September 30, ~~2022.~~2023. Accrued interest inis included in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheets.
As of December 31, 2022, the unamortized debt discount was $218,481. During the nine months ended September 30, 2023, the Company added $201,150 of debt discount related to the issuance of debentures, and amortized debt discount of $335,658 to interest expense on the loans. As of September 30, 2023, the unamortized debt discount was $83,973.
F-14
NOTE 9 – SECURED CONVERTIBLE DEBENTURES

Secured debentures that are payable to an otherwise unaffiliated third party consists of the following as of September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:
SCHEDULE OF SECURED DEBENTURES PAYABLE TO RELATED PARTY

September 30, 2022

December 31, 2021

YA II PN, Ltd. $ 500,000 $ 3,000,000
Mast Hill 595,000 -
Secured debentures 1,095,000 3,000,000
Less debt discount (564,416 ) (2,150,067 )
Secured debentures, net $ 530,584 $ 849,933
~~YA II PN, Ltd.~~
~~During the year ended December 31, 2021, the Company issued secured debentures to an otherwise unaffiliated third-party investor (the “Selling Stockholder”) in the aggregate of $4,500,000. The debentures are secured by all tangible and intangible assets of the Company and are also convertible into shares of our common stock at a conversion price of $0.03~~ ~~per share or a per share amount equivalent to~~ the weighted average (among the principal of the debentures) of 76.7% of the lowest VWAP of the Company’s common stock during the 15 trading days immediately preceding the conversion date, whichever is lower. As the ultimate determination of shares to be issued upon conversion of these debentures can exceed the current number of available authorized shares, we determined that the conversion features of these convertible debentures are not considered indexed to our Company’s own capital stock and characterized the fair value of the conversion features as derivative liability. In connection with the issuances of the debentures, the Company granted to the Selling Stockholder warrants to purchase up to ~~150~~ ~~million shares of the Company’s common stock. The warrants are exercisable at $0.03~~ ~~per share,~~ Twenty million of the warrants will expire on May 14, 2023, fifty million of the warrants will expire on February 10, 2024 and 100,000,0000 of the warrants will expire on August 20, 2024. As a result of these issuances and grants, we incurred the following (a) derivative liability of $~~3,982,000~~ ~~related to the conversion feature of the debentures; (b) relative fair value of the warrants granted of $1,581,000; and (c) and original issue discounts of $195,000~~ ~~of the debentures for a total of $5,758,000, of which, $4,423,000~~ ~~was accounted as debt discount and the remaining $1,335,000~~ ~~as financing costs.~~ ~~The debt discount is being amortized to interest expense over the term of the corresponding debentures.~~
~~As of December 31, 2021, the outstanding balance of the secured debentures amounted to $3,000,000, with an unamortized debt discount of $2,150,067, or a net balance of $849,933~~.
~~During the nine months ended September 30, 2022, the note holder converted principal of $3,000,000~~ ~~and accrued interest of $140,876, or a total $3,140,876, into~~ ~~775,748,690~~ ~~shares of the Company’s common stock with a fair value of $6,469,848. The Company followed the general extinguishment model to record the conversions and settlement of the debt. As such, the Company removed the debt and accrued interest totaled $3,140,876, the related unamortized debt discount totaled $1,784,879~~ ~~at the date of conversion. In addition, the Company revalued the derivative related to the bifurcated conversion option to its fair value of $3,972,000~~ ~~at the date of the conversion and removed that amount. As a result, the Company recorded a loss on extinguishment of debt of $1,141,850~~.
~~F-15~~
~~On May 5, 2022, the Company issued similar debentures to the Selling Stockholder in the aggregate amount of $500,000~~. The debentures bear interest at a rate of 8% per annum, secured by all of the tangible and intangible assets of the Company and are also convertible into shares of the Company’s common stock at a conversion price of $~~0.03~~ ~~per share or 80% of the lowest daily volume weighted average price (“VWAP”) of the Company’s common stock during the 10 trading days immediately preceding the conversion date~~. As the ultimate determination of shares of common stock to be issued upon conversion of these debentures can exceed the current number of available authorized shares, the Company determined that the conversion features of these debentures are not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as a derivative liability (see Note 10). In connection with the issuances of these debentures, the Company also granted to the selling stockholder warrants to purchase up to ~~8,333,333~~ ~~shares of common stock. The warrants are exercisable at $0.03~~ ~~per share and will expire in three years from their grant date. As a result of these issuances, the Company incurred the following (a) derivative liability of $680,000~~ ~~related to the conversion feature of the debentures; (b) relative fair value of the warrants granted of $81,000; and (c) and original issue discount of $25,000~~ ~~for a total of $786,000, of which, $500,000~~ ~~was accounted as debt discount and the remaining $286,000~~ as financing costs. The debt discount is being amortized to interest expense over the term of the corresponding debentures. During the nine months ended September 30, 2022, the Company amortized debt discount of $~~198,335~~ ~~to interest expense.~~
~~As of September 30, 2022, the outstanding balance of the secured debentures amounted to $500,000, with an unamortized debt discount of $301,645, or a net balance of $198,355. During the nine months ended September 30, 2022, the Company amortized debt discount of $563,542~~ ~~to interest expense on the YA II PN, Ltd. loans.~~
~~As of September 30, 2022,~~ ~~124,958,049~~ ~~shares of common stock were potentially issuable under the conversion terms of the outstanding debentures.~~

September 30,
2023

December 31,
2022

Mast Hill Note 1 119,306 595,000
Mast Hill Note 2 431,744 -
Mast Hill Note 3 230,000 -
Mast Hill Note 4 55,707 -
Mast Hill Note 5 63,000 -
Mast Hill Note 63,000 -
Less debt discount (236,783 ) (183,940 )
Secured debentures, net $ 662,974 $ 411,060

Mast Hill

On July 28, 2022, the Company issued senior secured debentures to an otherwise unaffiliated third-party investor (the “Investor”) in the aggregate of $595,000. The debentures bear interest at a rate of ~~10%~~ 10% per annum, mature on July 28, 2023, and ~~are~~is convertible into shares of our common stock at a conversion price of $0.0045 per share. If the Company issues subsequent equity instruments at an effective price per share that is lower than the conversion price of $0.0045 per shares, then the conversion price shall be reduced, at the option of the Holder, to a price equal to the Weighted Average Price (as defined), provided, further, that if the conversion price is equal to or less than $0.003, then the conversion price shall be reduced at the option of the Holder to a price equal to the lower ~~price~~price.. The senior secured debentures ~~are~~is secured by all of the Company’s assets and the assets of each of its subsidiaries pursuant to the Security Agreement. The security interest granted to the Investor under the Security Agreement iswas subordinate to the continuing security interest that remains in effect pursuant to the previous grant of a security interest in connection with a ~~still-outstanding~~then outstanding debenture to an earlier investor all tangible and intangible assets. In connection with the issuances of the debentures, the Company granted to the ~~Selling Stockholder~~Investor warrants to purchase up to 100 million shares of the Company’s common stock, which expire on July 28, 2027. The warrants are exercisable at $0.0045 per share. As a result of these issuances and grants, we incurred the following (a) relative fair value of the warrants granted of $223,000; and (b) original issue discounts of $92,325 of the debentures for a total of $315,325 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures. As of ~~September 30,~~December 31, 2022, the unamortized debt discount was $~~262,771~~183,940. During the nine months ended September 30, 2023, the Company amortized debt discount of $168,607 to interest expense on the loan. As of September 30, 2023, the unamortized debt discount was $15,333.
As of December 31, 2022 the balance due under the obligation was $595,000. During the nine months ended September 30, 2023, the Company converted $475,694 of principal and accrued interest into 239,500,000 shares of common stock with a fair value of $1,075,355 resulting in a loss on extinguishment of debt of $513,520. As of September 30, 2023, $119,306 was due under the note.
Mast Hill Debenture 2
On March 13, 2023, the Company issued an additional senior secured debenture to the Investor in the aggregate of $475,000. The debenture bears interest at a rate of 10% per annum, matures on March 13, 2024, and is convertible into shares of our common stock at a conversion price of $0.0045 per share.
F-15
At our option, we have the right to redeem, in full, the outstanding principal and interest under the debenture prior to its maturity date; provided, that, as of the date of the then-holder’s receipt of the redemption notice, there has not been an Event of Default. We must pay an amount equal to the principal amount being redeemed plus outstanding and accrued interest thereon, as well as a $750 administrative fee (the “Redemption Amount”). We must provide seven Trading Days’ (as such term is defined in the debenture) prior notice to the then-holder of the debenture of our intent to make a redemption. If such notice of redemption is received six months after the Issue Date, the then-holder has the right to convert any or all of such to-be-prepaid amount into shares of our Common Stock in accordance with the conversion provisions of the debenture prior to such redemption.
Further, commencing on May 10, 2023, and continuing on the tenth day of each calendar month thereafter, we are required to redeem an amount equivalent to the sum of $2.00 for each 12-count case of our beverages that we sell in the ordinary course, calculated two months in arrears. Accordingly, the first redemption payment is due and payable on May 10, 2023 for the cases sold during the month of March, 2023. Mandatory redemption payments are based upon revenues recognized by us in accordance with US GAAP for each such month, rather than upon the receipt by us of funds received from sales during a relevant month. The above-referenced seven trading days’ prior notice and conversion provisions do not apply to any of the mandatory redemption payments.
In connection with the issuances of the debentures, the Company granted to the Investor warrants to purchase up to 80 million shares of the Company’s common stock, which expire on March 13, 2028. The warrants are exercisable at $0.0045 per share. As a result of these issuances and grants, we incurred the following (a) relative fair value of the warrants granted of $150,000; and (b) original issue discounts and fees of $74,000 of the debentures for a total of $224,000 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures. During the nine months ended September 30, 2023, the Company amortized debt discount of $78,987 to interest expense on the loan. As of September 30, 2023, the unamortized debt discount was $145,013.
During the nine months ended September 30, 2023, the Company made principal payments of $43,256. As of September 30, 2023, $431,744 was due under the note.
Mast Hill Debenture 3
On April 25, 2023, the Company issued an additional senior secured debenture to the Investor in the aggregate of $230,000. The debenture bears interest at a rate of 10% per annum, matures on April 25, 2024, and is convertible into shares of our common stock at a conversion price of $0.0040 per share.
At our option, we have the right to redeem, in full, the outstanding principal and interest under the debenture prior to its maturity date; provided, that, as of the date of the then-holder’s receipt of the redemption notice, there has not been an Event of Default. We must pay an amount equal to the principal amount being redeemed plus outstanding and accrued interest thereon, as well as a $750 administrative fee (the “Redemption Amount”). We must provide seven Trading Days’ (as such term is defined in the debenture) prior notice to the then-holder of the debenture of our intent to make a redemption. If such notice of redemption is received six months after the Issue Date, the then-holder has the right to convert any or all of such to-be-prepaid amount into shares of our Common Stock in accordance with the conversion provisions of the debenture prior to such redemption.
Further, commencing on May 10, 2023, and continuing on the tenth day of each calendar month thereafter, we are required to redeem an amount equivalent to the sum of $2.00 for each 12-count case of our beverages that we sell in the ordinary course, calculated two months in arrears. Accordingly, the first redemption payment is due and payable on May 10, 2023 for the cases sold during the month of March, 2023. Mandatory redemption payments are based upon revenues recognized by us in accordance with US GAAP for each such month, rather than upon the receipt by us of funds received from sales during a relevant month. The above-referenced seven trading days’ prior notice and conversion provisions do not apply to any of the mandatory redemption payments.
In connection with the issuances of the debentures, the Company granted to the Investor warrants to purchase up to 43.6 million shares of the Company’s common stock, which expire on April 25, 2028. The warrants are exercisable at $0.0040 per share. As a result of these issuances and grants, we incurred the following (a) relative fair value of the warrants granted of $56,000; and (b) original issue discounts and fees of $28,000 of the debentures for a total of $84,300 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures. During the nine months ended September 30, 2023, the Company amortized debt discount of $32,649 to interest expense on the loan. As of September 30, 2023, the unamortized debt discount was $51,651.

As of September 30, ~~2022,~~ 2023, $~~147,745,854~~230,000 was due under the note.
F-16
Mast Hill Debenture 4
On June 14, 2023, the Company issued an additional senior secured debenture to the Investor in the aggregate of $55,706. The debenture bears interest at a rate of 10% per annum, matures on June 14, 2024, and is convertible into shares of our common stock at a conversion price of $0.0040 per share.
At our option, we have the right to redeem, in full, the outstanding principal and interest under the debenture prior to its maturity date; provided, that, as of the date of the then-holder’s receipt of the redemption notice, there has not been an Event of Default. We must pay an amount equal to the principal amount being redeemed plus outstanding and accrued interest thereon, as well as a $750 administrative fee (the “Redemption Amount”). We must provide seven Trading Days’ (as such term is defined in the debenture) prior notice to the then-holder of the debenture of our intent to make a redemption. If such notice of redemption is received six months after the Issue Date, the then-holder has the right to convert any or all of such to-be-prepaid amount into shares of our Common Stock in accordance with the conversion provisions of the debenture prior to such redemption.
Further, commencing on July 10, 2023, and continuing on the tenth day of each calendar month thereafter, we are required to redeem an amount equivalent to the sum of $2.00 for each 12-count case of our beverages that we sell in the ordinary course, calculated two months in arrears. Accordingly, the first redemption payment is due and payable on July 10, 2023 for the cases sold during the month of March, 2023. Mandatory redemption payments are based upon revenues recognized by us in accordance with US GAAP for each such month, rather than upon the receipt by us of funds received from sales during a relevant month. The above-referenced seven trading days’ prior notice and conversion provisions do not apply to any of the mandatory redemption payments.
In connection with the issuances of the debentures, the Company granted to the Investor warrants to purchase up to approximately 20.9 million shares of the Company’s common stock, which expire on June 14, 2028. The warrants are exercisable at $0.0040 per share. As a result of these issuances and grants, we incurred the following (a) relative fair value of the warrants granted of $19,000; and (b) original issue discounts and fees of $8,457 of the debentures for a total of $27,457 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures. During the nine months ended September 30, 2023, the Company amortized debt discount of $15,028 to interest expense on the loan. As of September 30, 2023, the unamortized debt discount was $12,429.
As of September 30, 2023, $55,707 was due under the note.
Mast Hill Debenture 5
On August 10, 2023, the Company issued an additional senior secured debenture to the Investor in the aggregate of $63,000. The debenture bears interest at a rate of 12% per annum, matures on June 14, 2024, and is convertible into shares of our common stock at a conversion price of $0.0030 per share.
At our option, we have the right to redeem, in full, the outstanding principal and interest under the debenture prior to its maturity date; provided, that, as of the date of the then-holder’s receipt of the redemption notice, there has not been an Event of Default. We must pay an amount equal to the principal amount being redeemed plus outstanding and accrued interest thereon, as well as a $1,000 administrative fee (the “Redemption Amount”). We must provide seven Trading Days’ (as such term is defined in the debenture) prior notice to the then-holder of the debenture of our intent to make a redemption. If such notice of redemption is received six months after the Issue Date, the then-holder has the right to convert any or all of such to-be-prepaid amount into shares of our Common Stock in accordance with the conversion provisions of the debenture prior to such redemption.
Further, commencing on July 10, 2023, and continuing on the tenth day of each calendar month thereafter, we are required to redeem an amount equivalent to the sum of $2.00 for each 12-count case of our beverages that we sell in the ordinary course, calculated two months in arrears. Accordingly, the first redemption payment is due and payable on July 10, 2023 for the cases sold during the month of March, 2023. Mandatory redemption payments are based upon revenues recognized by us in accordance with US GAAP for each such month, rather than upon the receipt by us of funds received from sales during a relevant month. The above-referenced seven trading days’ prior notice and conversion provisions do not apply to any of the mandatory redemption payments.
In connection with the issuances of the debentures, the Company granted to the Investor warrants to purchase up to approximately 28.6 million shares of the Company’s common stock, which expire on August 10, 2028. The warrants are exercisable at $0.0030 per share. As a result of these issuances and grants, we incurred the following (a) relative fair value of the warrants granted of $8,580; and (b) original issue discounts and fees of $4,390 of the debentures for a total of $12,970 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures. During the nine months ended September 30, 2023, the Company amortized debt discount of $613 to interest expense on the loan. As of September 30, 2023, the unamortized debt discount was $12,357.
As of September 30, 2023, $63,000 was due under the note.
As of September 30, 2023, no shares of common stock were potentially issuable under the conversion terms of the outstanding debentures.

At December 31, ~~2021,~~2022, accrued interest on the convertible notes payable was $~~54,110~~25,756. During the nine months ended September 30, ~~2022,~~2023, the Company added $~~109,854~~60,934 of additional accrued interest, and converted $~~140,876~~67,569 of accrued interest, ~~into common stock,~~ leaving an accrued interest balance on the convertible notes payable of $~~23,088~~19,121 at September 30, ~~2022.~~2023. Accrued interest is included in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheets.

~~NOTE 10 –~~ ~~DERIVATIVE LIABILITY~~
The FASB has issued authoritative guidance whereby instruments which do not have fixed settlement provisions are deemed to be derivative instruments. During fiscal year 2021, the Company issued convertible debentures, which, if converted into common stock, can potentially exceed the current number of available authorized shares of the Company (see Note 11). Since the number of shares is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to settle the conversion option. In accordance with the FASB authoritative guidance, the conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.
~~F-16~~
As of ~~September 30, 2022 and~~ December 31, ~~2021,~~2022, the ~~derivative liabilities were valued using the Binomial pricing model and/or Black Scholes pricing model with the following assumptions:~~
~~SCHEDULE OF DERIVATIVE LIABILITY~~

At
September 30, 2022

Remaining
2022

New
Derivative
2022

At
December 31,
2021

Stock Price $ 0.0060 $ .0120 $ .0168 $ 0.0052
Exercise Price $ 0.0048 $ .0062 $ .0082 $ 0.0039
Expected Life (Years) 0.59 0.34 1.00 0.74
Volatility 172 % 171 % 132 % 95 %
Dividend Yield 0 % 0 % 0 % 0 %
Risk-Free Interest Rate 4.05 % 1.72 % 2.16 % 0.39 %
 
Fair value:
Conversion feature $ 352,000 $ 3,972,000 $ 680,000 $ 2,121,000
The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future.
~~As discussed in Note 8, during the period, the Company converted $3,000,000~~ ~~of convertible notes. At issuance it was determined that the conversion feature of these notes contained a conversion feature that resulted in a derivative liability, the fair value of which~~unamortized debt discount was $~~2,121,000~~ at December 31, 2021. These convertible notes were converted to common shares during the period. As such, prior to conversion the Company revalued the derivatives to their fair value at the date of extinguishment of $~~3,972,000, resulting in change in fair value of $1,851,000~~183,940. ~~The Company removed the fair value of derivative of $3,972,000~~ ~~at date of extinguishment, which has been included in the net loss on extinguishment.~~
~~In addition, during~~During the nine months ended September 30, ~~2022,~~2023, the Company ~~recognized derivative liabilities~~added $348,727 related to the issuance of secured debentures, and amortized debt discount of $~~680,000~~295,884 ~~upon issuance~~to interest expense on the loans. As of ~~additional secured convertible debentures (See note above)~~September 30, 2023, the unamortized debt discount was $236,783.
NOTE 10 – ACQUISITION OBLIGATION
On January 21, 2021, the Company entered into an Agreement and Plan of Merger with S and S and its shareholders and acquired all of the capital stock of S and S. In consideration thereof, the Company issued to them an aggregate of nine million restricted shares of Kona Gold Beverage, Inc.’s common stock (the “Acquisition Stock”) of a fair value of $243,000. The Company did not grant them any registration rights in respect of the shares of Acquisition Stock. The Company also agreed to pay an aggregate of $1,050,000 (the “Aggregate Acquisition Payments”), the majority of which is allocated to certain creditors of S and S (including one of the S and S’s legacy shareholders) and approximately $89,249 was allocated and paid to the five S and S legacy shareholders on a pro rata basis. The Company paid approximately $400,000 of the Aggregate Acquisition Payments at the closing of the transaction. The remaining ~~derivative liabilities were revalued~~Aggregate Acquisition Payments, including the Remaining Acquisition Payments, are scheduled to be paid in monthly installments, in arrears on the tenth calendar day of each month, commencing on March 10, 2021, at a rate equivalent to $~~352,000~~2.00 per case of Lemin Superior Lemonade (the product line of S and S that we have now branded as Ooh La Lemin) that we sell until the Aggregate Acquisition Payments have been paid in full. The balance payable under the obligation was $659,550 at December 31, 2022. During the period ended September 30, 2023, the Company paid $6,762 of the remaining Aggregate Acquisition Payments, leaving an acquisition obligation balance of $652,788 at September 30, ~~2022.~~2023
F-17
NOTE 11 – LEASE LIABILITIES

The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company leases its office and warehouse locations, and certain warehouse equipment. Leases with an initial term of 12 months or less are not included on the balance sheets.

Operating Leases

The Company leases approximately 4,500 square feet of corporate office and warehouse space located at 746 North Drive, Suite A, Melbourne, Florida 32934. The lease is for a five-year term and expires on May 31, 2023. The ~~initial monthly base rent was approximately $3,994, plus state taxes. The~~ monthly base rent increases annually by 3 percent. In May 2023, the Company extended the lease through May 31, 2024. The initial monthly base rent was approximately $4,628, plus state taxes.

The Company leases a 30,000 square foot warehouse and main distribution hub in Greer, South Carolina. The lease is for a 63-month term that commenced in May 2019 and expires on August 1, 2026. Beginning in April 2020, the Company’s monthly rent includes monthly base payments of $10,200, plus applicable monthly CAM fees (“Common Area Maintenance”). The monthly base rent increases annually by 2 percent.
~~F-17~~
The Company leases a 10,000 square foot ~~distribution hub~~building in Conway, South Carolina. The lease is for a 62-month ~~term~~period that commenced in October 2021 and expires in November ~~2026~~.2026. The Company’s monthly rent is approximately $7,261 plus applicable monthly CAM fees (Common Area Maintenance). The monthly base rent increases annually by 1.5 percent. In October 2021, the Company recognized an operating lease right of use (“ROU”) asset and lease liability of $345,649, related to the Conway, South Carolina operating lease utilizing a present value rate of 10%.
On June 1, 2023, the Company entered into a lease termination agreement with its landlord for its building in Conway, South Carolina. The Company’s deposit of $7,500 was applied to outstanding rent, and the Company recorded the removal of its right-of-use asset of $248,270, and corresponding operating lease liability of $261,125 on June 1, 2023. Furthermore, the Company recorded a loss on termination of the lease of $9,601 during the nine months ended September 30, 2023, which is included in selling, general and administrative expenses in the condensed consolidated statements of operations. The Company issued the Landlord a promissory note for $16,206, with interest at a rate of 8% per annum, and a maturity date of December 31, 2023. The lease agreement was terminated effective June 30, 2023.

Finance Leases

On March 17, 2020, the Company entered into a lease agreement for equipment. The finance lease is for a 62-month term that commenced in April 2020 and expires in March ~~2025~~.2025. The agreement includes monthly payments of $676.

During the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, lease costs totaled $~~152,841~~136,726 and $~~93,569~~152,841, respectively.

Our ROU asset balance was $~~966,955~~762,464 as of December 31, ~~2021.~~2022. During the nine months ended September 30, ~~2022,~~2023, the Company recorded ~~reduction~~amortization of ROU assets of $~~143,320~~79,792 related to its leases and removed an ROU asset of $248,270, resulting in an ROU asset balance of $~~823,635~~434,402 as of September 30, ~~2022.~~2023.

As of December 31, ~~2021,~~2022, lease liabilities totaled $~~1,052,720~~838,882, comprised of finance lease liabilities of ~~$25,481~~$17,824 and operating lease liabilities of $~~1,027,239~~821,058. During the nine months ended September 30, ~~2022,~~2023, the Company made payments of $~~3,798~~5,594 against its finance lease liability, ~~and~~ $~~153,890~~97,106 against its operating lease liability and removed $261,125 against its terminated operating lease liability. ~~As of~~At September 30, ~~2022,~~2023, lease liabilities totaled $~~895,032~~475,057, ~~comprised~~ of ~~finance lease liabilities of $19,753~~ ~~and operating lease liabilities of $875,279. At September 30, 2022,~~which the current portion of lease liabilities was $~~217,166~~178,074, leaving a long-term lease liabilities balance of $~~677,866~~296,983.
F-18

As of September 30, ~~2022,~~2023, the weighted average remaining lease terms for operating lease and finance lease are ~~3.87~~1.50 years and ~~2.50~~3.81 years, respectively. As of September 30, ~~2022,~~2023, the weighted average discount rate for operating lease is 10.00% and 2.09% for finance lease.

Future minimum lease payments under the leases are as follows:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
Years Ending December 31, Amount Amount
2022 (remaining) $ 77,686
2023 282,347
2023 (remaining) $ 57,521
2024 262,715 197,491
2025 261,083 170,059
2026 and thereafter 198,217
2026 113,790
2027 and thereafter -
Total payments 1,082,048 538,861
Less: Amount representing interest (187,016 ) (63,804 )
Present value of net minimum lease payments 895,032 475,057
Less: Current portion (217,166 ) (178,074 )
Non-current portion $ 677,866 $ 296,983

NOTE 12 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company’s issued and outstanding preferred stock, par value $0.00001 per share, at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~988,000~~989,000 and 988,000, respectively. The Board, without further stockholder approval, may issue preferred stock in one or more series from time to time and fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares of each series.

~~F-18~~
Series A Preferred Stock

The Company had authorized 4,000,000 shares of Series A Preferred Stock, par value of $0.00001 per share (the “Series A Preferred Stock”), of which no shares were issued or outstanding at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Each share of Series A Preferred Stock, when outstanding, could have been converted into one share of Common Stock.

Series B Preferred Stock

The Company had authorized 1,200,000 shares of Series B Preferred Stock, par value of $0.00001 per share (the “Series B Preferred Stock”), of which 488,000 were issued and outstanding at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Each share of Series B Preferred Stock may be converted into one share of Common Stock.

Series C Preferred Stock

On ~~July 8, 2020,~~February 13, 2023, the Company ~~reduced~~increased the authorized number of Series C Preferred Stock from ~~3,300,000~~250 to ~~250~~2,000 shares, par value $0.00001 per share (the “Series C Preferred Stock”), by filing a Certificate of Designation of the Preferences, Rights, and Limitations of the Series C Preferred Stock with the Secretary of State of the State of Delaware. ~~The~~On July 8, 2020, the Company ~~also~~ amended the terms of the Series C Preferred ~~Stock.~~ Stock filed a Certificate of Designation of the Preferences, Rights, and Limitations of the Series C Preferred Stock with the Secretary of State of the State of Delaware. The holders of shares of the Series Preferred C Stock are now entitled to 2,000,000 votes for every share of our Series Preferred C Stock held. The holders of the Series Preferred C Stock are not entitled to receive dividends. Upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, before any distribution or payment will be made to the holders of any stock ranking junior to the Series C Preferred Stock, the holders of the Series C Preferred Stock will be entitled to be paid out of the Company’s assets an amount equal to $1.00 in the aggregate for all issued and outstanding shares of the Series C Preferred Stock (as adjusted for any stock dividends, combinations, splits, recapitalizations, and the like with respect to such shares) (the “Preference Value”). After the payment of the full applicable Preference Value of each share of the Series C Preferred Stock, our remaining assets legally available for distribution, if any, will be distributed ratably to the holders of the Common Stock. The Series C Preferred Stock has conversion rights, whereby each share of the Series C Preferred Stock automatically converts into one share of Common Stock on the one-year anniversary of the issuance date.

~~The Company has authorized~~At September 30, 2023, ~~250~~1,000 shares of Series C Preferred Stock ~~of which~~ ~~140~~ ~~shares~~ were issued and outstanding, and at December 31, ~~2020. In July 2021,~~2022, ~~each share of the Series C Preferred Stock automatically converted into one share of Common Stock on the one-year anniversary of the issuance date. At September 30, 2022 and December 31, 2021,~~ no shares of Series C Preferred Stock were issued and outstanding.
F-19

Series D Preferred Stock

The Company had authorized 500,000 shares of Series D Preferred Stock, par value of $0.00001 per share (the “Series D Preferred Stock”), of which 500,000 shares were issued and outstanding at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Each share of the Series D Preferred Stock may be converted into 1,000 shares of Common Stock.

Common Stock

On February 13, 2023, the Company increased the authorized number of shares of Common Stock from 2,500,000,000 to 10,500,000,000 shares, par value $0.00001 per share (the “Common Stock”), by filing a Certificate of Amendment to the amended and restated Certificate of Incorporation with the Secretary of State of the State of Delaware. The Company has authorized ~~2,500,000,000~~10,500,000,000 shares of the Common Stock, ~~respectively,~~ of which ~~1,806,458,236~~2,382,423,530 shares were issued and outstanding at September 30, ~~2022,~~2023, and ~~1,004,709,546~~2,000,276,378 shares were issued and outstanding at December 31, ~~2021.~~2022, respectively.

Equity Transactions

~~On April 1, 2022,~~During the nine months ended September 30, 2023, the Company ~~granted~~issued an aggregate of ~~1,000,000~~28,000,000 shares of Common Stock ~~to Peter Troy pursuant to that certain Employment Agreement dated October 1, 2021, by and between Mr. Troy and the Company. At the date~~for payment of ~~grant, the fair market value of the shares was $0.0085~~ ~~per share based on the closing price of the Common Stock, for a total value~~financing costs of $~~8,500~~126,000.
~~F-19~~

During the nine months ended September 30, ~~2022,~~2023, the Company issued an aggregate of ~~775,748,690~~269,500,000 shares of Common Stock with a fair value of $~~6,496,848~~1,212,750 upon the conversion of $~~3,000,000~~493,366 of principal, and $~~140,876~~60,934 of accrued interest on its secured convertible debentures, at an average price of $~~0.0040~~0.0020 resulting in a loss on extinguishment of debt of $654,450 (see Note 9).

During the nine months ended September 30, ~~2022, and in connection with the issuance of the debenture,~~2023, the Company issued ~~to the lender~~an aggregate of ~~25,000,000~~67,164,179 shares of Common Stock on the ~~Company’s common stock at a price~~cashless exercise of $~~0.0040~~ ~~per share (see Note 8). The fair value of the~~ ~~25,000,000~~ ~~shares issued was $135,000~~ ~~and recorded as a debt discount in the accompanying condensed consolidated balance sheet.~~warrants.

During the nine months ended September 30, ~~2021,~~2023, the Company issued an aggregate of ~~84,660,068~~17,482,973 shares of Common Stock with a fair value of $~~1,529,635~~78,673 ~~upon the conversion of $1,500,000~~ ~~of principal, and $29,635~~ ~~of accrued interest on its secured convertible debentures,~~ at an average price of $~~0.0181~~0.0011 for financing related to 2023 Equity Purchase Agreement (see 2023 Equity Purchase Agreement).
2023 Equity Purchase Agreement
Pursuant to an Equity Purchase Agreement (the “Purchase Agreement”) dated as of March 30, 2023 (the “EPA”), the Company (i) agreed to sell to the same entity with whom we had entered into the Securities Purchase Agreement dated as of March 13, 2023 up to $5,000,000.00 (the “Maximum Commitment Amount”) of shares of our Common Stock (the “Put Shares”) and (ii) granted to that Investor a Common Stock Purchase Warrant (the “Warrant”) that is exercisable for the purchase of up to an aggregate of 56,000,000 shares (the “Warrant Shares”) of our Common Stock.
Upon the terms and conditions set forth in the Purchase Agreement, the Company has the right, but not the obligation, to direct the Investor, by delivery to the Investor of a Put Notice from time to time, to purchase shares of our Common Stock (i) in a minimum amount not less than $25,000.00 and (ii) in a maximum amount up to the lesser of (a) $500,000.00 or (b) 150% of the Average Daily Trading Value of our Common Stock (as defined in the Purchase Agreement). At any time and from time to time through and including March 30, 2025 (the “Commitment Period”), except as provided in the Purchase Agreement, the Company may deliver a Put Notice to the Investor.
F-20
The Commitment Period commences on the Execution Date, and ends on the earlier of (i) the date on which the Investor shall have purchased Put Shares pursuant to the Purchase Agreement equal to the Maximum Commitment Amount, (ii) March 30, 2025, (iii) written notice of termination by the Company to the Investor (which shall not occur during any Valuation Period or at any time that the Investor holds any of the Put Shares), (iv) the Registration Statement for the Put Shares is no longer effective after its initial effective date, or (v) the date that, pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any person commences a proceeding against the Company, a Custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors.
We also granted the Warrant to purchase up to an aggregate of the 56,000,000 Warrant Shares. The Warrant has a five-year term and is immediately exercisable at an exercise price of $0.0045 per share, subject to adjustment and is exercisable by the then-holder on a “cashless” basis. The Warrant contains an adjustment provision that, subject to certain exceptions, reduces the exercise price if we issue shares of Common Stock or common stock equivalents at a price lower than the then-current exercise price of the Warrant. Any stock splits, reverse stock splits, recapitalizations, mergers, combinations and asset sales, stock dividends, and similar events will result in an equitable adjustment of the exercise price of the Warrant and, in certain circumstances, the number of Warrant Shares. The Warrant is subject to an “exercise blocker,” such that the Investor cannot exercise any portion of the Warrant that would result in the Investor and its affiliates holding more than 4.99% of the then-issued and outstanding shares of Common Stock following such exercise (excluding, for purposes of such determination, shares of the Common Stock issuable upon exercise of the Warrant or Put Notice that had not then been exercised, respectively). The fair value of the warrants was determined to be $163,000 and was recorded as a finance cost in the statement of operations.

During the nine months ended September 30, ~~2021,~~2023, the Company issued an aggregate of ~~9,000,000~~17,482,973 shares of ~~its~~ Common Stock with a fair value of $~~270,900~~78,673 ~~for the acquisition~~at an average price of ~~S and S.~~$0.0011
NOTE 13 – SHARE BASED COMPENSATION

Common Stock Issuable

On August 12, 2015, the Company entered into an Employment Agreement with Robert Clark (the “Clark Employment Agreement”). On December 1, 2016, the Company entered into an Amendment to Employment Agreement (the “Clark Amendment”; and, together with the Clark Employment Agreement, the “Amended Clark Employment Agreement”). Pursuant to the terms of the Amendment Clark Employment Agreement, the Company agreed to issue, among other securities, 200,000,000 shares of the Common Stock. Immediately, Mr. Clark decided to defer receipt of 80,000,000 of such shares; thus leaving 120,000,000 shares of the Common Stock to be issued to him.

The 120,000,000 shares of the Common Stock were issued to Mr. Clark, as follows: (i) on October 28, 2015, the Company issued 30,000,000 of such shares; (ii) on March 2, 2016, the Company issued 40,000,000 of such, and (iii) on ~~May~~Mary 16, 2016, the Company issued 50,000,000 of such shares. On April 19, 2018, (i) 40,000,000 shares were cancelled and returned to the Company, and on July 31, 2019, (ii) an additional 50,000,000shares were cancelled and returned to the Company. Accordingly, as of December 31, 2019, the Company owed to Mr. Clark an aggregate of 169,999,860 shares to be reissued to him upon his request pursuant to the terms of the oral agreement with him which were valued at $1,386,497 based on their fair value at the date of grant. The amounts are reflected as common ~~shares~~stock issuable ~~balance at~~as of September 30, ~~2022~~2023 and December 31, ~~2021 were $1,386,497~~.2022.

Issuance of Class C Preferred Stock to a related party
On February 16, 2023, we issued 1,000 shares of our Series C Preferred Stock to Robert Clark, CEO and major shareholder. The Company determined the fair value of the shares was $185,000 using a monte carlo valuation method. We issued these shares of common stock pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act as not involving a public offering.
F-21
Summary of Warrants

A summary of warrants for the nine months ended September 30, ~~2022,~~2023 is as follows:
SCHEDULE OF SUMMARY OF WARRANTS
Weighted
Number Average
of Exercise
Warrants Price
Balance outstanding, December 31, 2021 170,000,000 $ 0.0300
Warrants granted 108,333,333 0.0065
Warrants exercised - -
Warrants expired or forfeited - -
Balance outstanding, September 30, 2022 278,333,333 $ 0.0223
Balance exercisable, September 30, 2022 278,333,333 $ 0.0223
~~F-20~~
Weighted
Number Average
of Exercise
Warrants Price
Balance outstanding, December 31, 2022 278,333,333 0.0223
Warrants granted 257,689,945 0.0038
Warrants exercised (67,164,179 ) 0.0149
Warrants expired or forfeited (20,000,000 ) -
Balance outstanding, September 30, 2023 448,859,099 $ 0.0137
Balance exercisable, September 30, 2023 448,859,099 $ 0.0137

Information relating to outstanding warrants at September 30, ~~2022,~~2023, summarized by exercise price, is as follows:
SCHEDULE OF OUTSTANDING WARRANTS
Outstanding Exercisable Outstanding Exercisable
Exercise Price Per Share Exercise Price Per Share Shares
Life
(Years)

Weighted
Average
Exercise Price
Shares
Weighted
Average
Exercise Price
Exercise Price Per Share Shares
Life
(Years)

Weighted
Average
Exercise Price
Shares
Weighted
Average
Exercise Price

$ 0.0045 100,000,000 4.83 $ 0.0045 100,000,000 $ 0.0045 0.0030 - 0.0048 290,525,766 4.49 $ 0.0043 290,525,766 $ 0.0043
$ 0.03 158,333,333 1.76 $ 0.03 158,333,333 $ 0.03 0.03 158,333,333 1.01 $ 0.03 158,333,333 $ 0.03
$ 0.05 20,000,000 0.62 $ 0.05 20,000,000 $ 0.02
278,333,333 2.78 $ 0.03 278,333,333 $ 0.03 448,859,099 3.17 $ 0.0146 448,859,099 $ 0.0146

Based on the fair market value of $~~0.0060~~0.0022 per share on September 30, ~~2022, the~~2023, there was no intrinsic value ~~attributable~~attributed to both the outstanding and exercisable warrants ~~is $150,000~~at September 30, ~~2022.~~2023.

In connection with the issuance of senior convertible secured debentures on ~~July 28, 2022~~March 13, 2023 (see Note 9), the Company granted warrants with a relative fair value of $~~223,000~~285,000 to purchase up to an aggregate of ~~100,000,000~~80,000,000 shares of the Common Stock. Each warrant has a five-year term from issuance and is immediately exercisable at an exercise price of $0.0045 per share, subject to adjustment. The relative fair value of these warrants at grant date was $~~223,000~~285,000, which was determined using a Black-Scholes-Merton option pricing model with the following assumptions: fair value of our stock price of $~~0.0060~~0.0044 per share, the expected term of three years, volatility of ~~133~~257%, dividend rate of 0%, and risk-free interest rate of ~~2.81~~3.88%.
In connection with the issuance of ~~convertible secured debentures~~2023 Equity Purchase Agreement on ~~May 2, 2022~~March 30, 2023 (see Note 9)12), the Company granted warrants ~~with a relative fair value of $81,000~~ to purchase up to an aggregate of ~~8,333,333~~56,000,000 shares of the Common Stock. Each warrant has a ~~three-year~~five-year term from issuance and is immediately exercisable at an exercise price of $~~0.03~~0.0045 per share, subject to adjustment. The ~~relative~~ fair value of these warrants at grant date was $~~81,000~~165,000, which was determined using a Black-Scholes-Merton option pricing model with the following assumptions: fair value of our stock price of $~~0.0180~~0.0044 per share, the expected term of three years, volatility of ~~132~~257%, dividend rate of 0%, and risk-free interest rate of ~~2.16~~3.88%.
In connection with the issuance of senior convertible secured debentures on April 25, 2023 (see Note 9), the Company granted warrants with a relative fair value of $89,000 to purchase up to an aggregate of 43,600,000 shares of the Common Stock. Each warrant has a five-year term from issuance and is immediately exercisable at an exercise price of $0.0040 per share, subject to adjustment. The relative fair value of these warrants at grant date was $89,000, which was determined using a Black-Scholes-Merton option pricing model with the following assumptions: fair value of our stock price of $0.0028 per share, the expected term of three years, volatility of 233%, dividend rate of 0%, and risk-free interest rate of 3.62%.
In connection with the issuance of senior convertible secured debentures on June 14, 2023 (see Note 9), the Company granted warrants with a relative fair value of $37,000 to purchase up to an aggregate of 20,889,945 shares of the Common Stock. Each warrant has a five-year term from issuance and is immediately exercisable at an exercise price of $0.0030 per share, subject to adjustment. The relative fair value of these warrants at grant date was $37,000, which was determined using a Black-Scholes-Merton option pricing model with the following assumptions: fair value of our stock price of $0.0024 per share, the expected term of three years, volatility of 232%, dividend rate of 0%, and risk-free interest rate of 4.37%.
In connection with a broker that is assisting the Company in its financing transactions, the Company granted warrants to purchase up to an aggregate of 2,916,112 shares of the Common Stock. Each warrant has a five-year term from issuance and is immediately exercisable at an weighted average exercise price of $0.0043 per share, subject to adjustment. The fair value of these warrants at grant date was $5,269, which was determined using a Black-Scholes-Merton option pricing model with the following assumptions: fair value of our stock price of $0.0026 per share, the expected term of three years, volatility of 225%, dividend rate of 0%, and weighted average risk-free interest rate of 3.28%.
In connection with the issuance of senior convertible secured debentures on August 8, 2023 (see Note 9), the Company granted warrants with a relative fair value of $8,580 to purchase up to an aggregate of 28,600,000 shares of the Common Stock. Each warrant has a five-year term from issuance and is immediately exercisable at an exercise price of $0.0030 per share, subject to adjustment. The relative fair value of these warrants at grant date was $8,580, which was determined using a Black-Scholes-Merton option pricing model with the following assumptions: fair value of our stock price of $0.0024 per share, the expected term of three years, volatility of 232%, dividend rate of 0%, and risk-free interest rate of 4.37%.

NOTE 1314 – SUBSEQUENT EVENTS
~~Subsequent to September 30, 2022, the~~Cashless Conversion of Secured Convertible Debentures
The Company issued an aggregate of ~~34,910,751~~136,250,000 shares of Common Stock to ~~YA II PN, Ltd.~~Mast Hill upon the conversion of $~~100,000~~127,121 of principal, and $~~15,205~~17,029 of accrued interest ~~on its secured convertible debentures,~~ at an ~~average~~exercise price of $~~0.0033~~0.00108 ~~(see Note 9)~~. We issued these shares of common stock pursuant to the exception from registration provided by Section 3(a)(9) of the Securities Act, we did not receive any funds resulting from the conversions as we had received funds from Mast Hill Fund from the secured debentures that we sold in March 2023.

On November 2, 2022, the Company entered into a secured non-interest bearing advance agreement with an unaffiliated third party for the purchase of future receipts/revenues. Under the agreements, the Company received a lump sum payment ~~of $168,000~~ ~~after fees, and in return, the lender receives a secured right to collect a fix sum of future receipts/revenue of $241,500~~ to be collected by the Company. In accordance with the agreement, the Company agreed to sell, assign and transfer to the Purchaser of all the Company’s payments, receipts, settlements and funds paid to or received by or for the account of the Company from time to time on and after the date hereof in payment or settlement of the Company’s existing and future accounts, payment intangibles, credit, debit and/or stored value card transactions, contract rights and other entitlements arising from or relating to the payment of monies from the Company’s customers and/or other payors or obligors. The loan is payable in daily payments of $~~1,725~~, is secured by these assets described above, and is guaranteed by Robert Clark, the Company’s Chief Executive Officer. Upon execution of the advance and receipt of funds, the Company recorded the difference ~~of $73,500~~ ~~between the cash collected and the face amount of the note as a note discount, and will amortize the note discount as interest expense over the life of the advance.~~
~~F-21~~F-22

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations and financial condition for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 should be read in conjunction with the financial statements and related notes and the other financial information that are included elsewhere in this Quarterly Report. This discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements,” and “Description of Business” sections in this ~~Quarterly~~Annual Report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. We and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this ~~Quarterly~~Annual Report and other filings with the SEC, reports to our stockholders, and news releases. All statements that express expectations, estimates, forecasts, or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “may,” “should,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements.
We undertake no obligation to update or revise any of the forward-looking statements after the date of this ~~Quarterly Report~~Annual Reports to confirm forward-looking statements to actual results. Important factors on which such statements are based are assumptions concerning uncertainties, including, but not limited to, uncertainties associated with the following:
● Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans;

● Our failure to earn revenues or profits;

● Volatility or decline of our stock price;

● Potential fluctuation in our financial results;

● Rapid and significant changes in markets;

● Litigation with or legal claims and allegations by outside parties;

● Impacts from the COVID-19 pandemic; and

● Insufficient revenues to cover operating costs.
The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this ~~Quarterly~~Annual Report. This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result of various factors.
1
Results of Operations
Overview
~~Our business has grown rapidly since inception in 2015, and we anticipate that our business will continue to grow significantly.~~ In the ~~three~~nine months ended September 30, ~~2022,~~2023, the Company saw ~~an increase~~a decrease in growth compared to the same period of the prior year period, as distribution by our current distributors and new distributors, who were, and whose clients were, affected by COVID-19 had resumed and saw fewer COVID-19 pandemic-related distribution impacts. The Company acquired S and S Beverage, Inc. (“S and S”), in early 2021, which increased our product variety, resulting in the commencement of new distribution contracts.period.
We derive our revenue from sales of our products to online consumers, to resellers, and to distributors, Product sales to resellers include sales to convenience stores, grocery stores, and smoke and gift shops that complement our current product offering. Product sales to distributors include ~~four~~our Ooh La Lemin lemonade, our energy drinks, and our HighDrate CBD-infused energy ~~waters, and our apparel, such as t-shirts and hats. In early 2021, we broadened our product line to include Ooh La Lemin lemonade.~~waters. We also distribute our products and other companies’ products at retail. ~~In late 2021, we expanded our distribution operations with the addition of a second distribution center.~~
We have experienced and expect to continue to experience ~~substantial growth~~a decrease in our operations as we seek to ~~expand through additional products~~reorganize and ~~acquisitions that complement our current product offerings.~~evaluate the Company’s operations. We expect that revenue will ~~continue to increase~~decrease in fiscal year ~~2022~~2023 compared to fiscal year ~~2021,~~2022, as the Company has sold its interest in Ooh La Lemin lemonades, and anticipates closing one of its two distribution ~~by our current distributors, who were, and whose clients were, affected by COVID-19 has resumed and we expect to see fewer COVID-19 pandemic-related distribution impacts for~~centers located in Greer, SC during the remaining there months of fiscal year ~~2022. Based on those expectations, we now anticipate signing more favorable agreements with larger, reputable tier 1 and mid-size distributors, big box stores, and grocery chains.~~2023. The following is a more detailed discussion of our financial condition and results of operations for the period presented.
~~Impact of Inflation~~
Recent inflationary trends have led to a moderate increase in some of the costs to produce and ship our products. To date, we have not passed the increases in those costs to our consumers. Continued prolonged periods of inflationary pressure on some or all of those costs could have a material adverse effect on our profit margins from sales of those products or could require us to increase prices for those products, which could reduce consumer demand for those products.
Three Months ended September 30, ~~2022~~2023 compared to Three Months ended September 30, ~~2021~~2022
Overview
As reflected in the accompanying financial statements, during the three months ended September 30, ~~2022,~~2023, we incurred a net loss of ~~$1,192,057 and used cash in operations of $2,148,583,~~approximately $518,092, compared to a net loss of ~~$2,230,715 and used cash in operations of $1,586,677~~approximately $1.2 million for the three months ended September 30, ~~2021.~~2022. As of September 30, ~~2022,~~2023, we had a stockholders’ deficit of ~~$3,349,654.~~approximately $5.4 million.
The following is a more detailed discussion of our financial condition and results of operations for the period presented, along with prior periods.
21
Revenue
The following table presents our net revenues, by revenue source, and the period-over-period percentage change, for the period presented:

Three Months Ended
September 30,
Three Months Ended
September 30,
2022 2021 2023 2022
Revenue Source Revenue Revenue % Change Revenue Revenue % Change
Distributors $ 223,849 $ 150,929 48 % $ 69,317 $ 223,849 (69 )%
Amazon and Walmart Marketplace 30,334 41,669 (27 )%
Amazon 6,910 30,334 (77 )%
Online Sales 7,998 17,678 (55 )% 7,710 7,998 (4 )%
Retail 897,549 347,247 159 % 629,155 897,549 (30 )%
Shipping 3,516 4,451 (21 )% 1,205 3,516 (66 )%
Sales Returns and Allowances (32,700 ) (16,599 ) 97 % (26,500 ) (32,700 ) (19 )%
Net Revenues $ 1,130,546 $ 545,375 107 % $ 687,797 $ 1,130,546 (39 )%
The following table presents our net revenues by product lines for the ~~periods~~period presented:
Three Months Ended
September 30,
2022 2021
Product Line Revenue Revenue % Change
Hemp Energy Drinks $ 25,743 $ 123,770 (79 )%
CBD Energy Waters 13,686 28,491 (52 )%
Lemonade Drinks 222,689 57,911 285 %
Apparel 63 104 (39 )%
Retail 897,549 347,247 158 %
Shipping 3,516 4,451 (21 )%
Sales returns and allowance (32,700 ) (16,599 ) 97 %
Net Revenues $ 1,130,546 $ 545,375 107 %
Three Months
September 30,
2023 2022
Product Line Revenue Revenue % Change
Energy Drinks $ 4,327 $ 25,743 (83 )%
CBD Energy Waters 14,604 13,686 7 %
Lemonade Drinks 65,006 222,689 (71 )%
Apparel - 63 (100 )%
Retail 629,155 897,549 (30 )%
Shipping 1,205 3,516 (66 )%
Sales returns and allowance (26,500 ) (32,700 ) (19 )%
Net Revenues $ 687,797 $ 1,130,546 (39 )%
During the three months ended September 30, ~~2022,~~2023, we reported net revenues of ~~$1,130,546,~~approximately $687,797, which is ~~an increase~~a decrease of ~~$585,171,~~approximately $442,749, or ~~107%~~approximately 39%, compared to net revenues of ~~$545,375~~approximately $1.1 million for the three months ended September 30, ~~2021. An increase~~2022. A decrease of ~~$550,302~~approximately $268,394 of our revenue is attributable to ~~increased~~decreased retail revenue, while our ~~product sales increased~~remaining net revenue decreased in net revenue by ~~$34,869.~~approximately $174,335. We attribute the ~~significant increase~~decrease in retail revenue to ~~attaining~~ a ~~larger percentage of the territory in which the Company distributes, including the addition~~loss of a ~~third distribution hub in late fiscal 2021~~vendor that we purchase certain products from and the ~~hiring of additional employees~~subsequent loss in distribution to ~~service this territory.~~ customers that we sold those products to. We attribute the ~~increase~~decrease in remaining net revenue to financing the Company’s product sales from the prior period to the signing of new agreements in new territories, the commencing of an anticipated rollout of our drink products with a national retailer late in the third quarter, and the hiring of additional sales representatives to service new territories.line. We anticipate that ~~the rollout of our drink products with a national retailer will continue in the fourth quarter. The Company~~revenue will continue to ~~experience delays~~decrease in ~~the rebranding our hemp product line and the subsequent production in the remainder of~~ fiscal year ~~2022. Despite this delay, we expect that our product revenue will increase in the remaining fiscal year 2022~~2023 compared to fiscal year ~~2021. Further, the additional sales personnel the Company hired will continue to lead sales efforts~~2022, as the Company ~~expands into~~has sold its interest in Ooh La Lemin lemonades, and expects closing one of its two distribution centers located in Greer, SC during the ~~new territories.~~remaining three months of fiscal year 2023. The Company anticipates ~~signing more favorable agreements with larger, reputable tier 1~~evaluating and ~~mid-size distributors, big box stores, and grocery chains~~reorganize its operations in these new territories. In addition, we anticipate that our retail revenue will continue to increase as we broaden our customer base with increased distribution to additional grocery and convenience chains.the remaining three months of fiscal year 2023.s
Cost of Revenues
Cost of revenues consists primarily of expenses associated with products sold to distributors and resellers, including product and shipping costs. Costs also include credit card fees, fees incurred for sales that occur on Amazon.com, and other transaction fees related to the processing of consumer transactions. Typically, we expect that the cost of revenues will increase as a direct correlation to increases in sales. Thus, our cost of revenues increases on an absolute basis versus on a percentage of sales basis. At the same time, when sales increase, thereby increasing our orders with our co-packers, our cost of products decreases because of the volume discounts we receive from our co-packers.
32
During the three months ended September 30, ~~2022,~~2023, we reported cost of revenues of ~~$873,319,~~approximately $501,056, which is ~~an increase~~a decrease of ~~$430,553,~~approximately $372,263, or ~~97%~~approximately 43%, compared to ~~$442,766~~approximately $873,319 for the three months ended September 30, ~~2021.~~2022. This ~~increase~~decrease is attributed to ~~an increase~~the decrease in sales in both our products and retail distribution in ~~2022,~~2023, compared to the prior year period. The cost of revenues increase was less than the increase in revenues. This is primarily attributed to increased costs in the prior period in obtaining our ingredients for our products, for production of our products, and for shipping our products. We expect that we will continue to see ~~an increased~~comparable cost of revenues to the revenues in the remaining fiscal year ~~2022, primarily due to an anticipated increase in revenues.~~2023. In addition, as the ~~cost of shipping our products~~Company continues to ~~remain elevated,~~evaluate and reorganize, we also anticipate increased costs for obtaining our ingredients for our products, increased costs for production of our products, and increased costs of shipping our products. We continue to seek alternative methods to reduce costs for production andexpect the cost of ~~shipping our products in fiscal year 2022.~~revenue to decrease.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses (“SG&A”) expenses consist primarily of professional fees, salaries and wages, advertising, rent, travel expenses, sponsorships, and general office and administrative expenses related to maintaining our facilities. Selling, general and administrative expenses ~~increased~~decreased in the three months ended September 30, ~~2022,~~2023, to approximately $656,607 from approximately $1,075,044, ~~from $756,110, an increase~~a decrease of ~~$318,934~~approximately $418,437 over the same period last year. The ~~increase~~decrease was driven by ~~increased~~decreased operating expenses associated with ~~hiring additional sales employees,~~lower advertising costs, wages and ~~marketing, travel expenses,~~salaries, legal ~~and accounting fees, rent~~expense related to ~~an additional distribution warehouse,~~corporate activity, and rent, vehicle, and shipping expenses ~~and partially offset by lower professional fees.~~associated with selling our ownership interests in Ooh La Lemin. We expect that, as we ~~expand~~decrease our business operations, SG&A expenses will continue to ~~increase.~~decrease.
We expect that as we ~~expand~~reorganize and evaluate our business operations, and continue to incur additional corporate-related expenses associated with our status as a fully registered issuer with the SEC under the Securities Exchange Act of 1934, as amended (the “1934 Act”), SG&A expenses will continue to ~~increase.~~decrease.
Other Income and Expenses
Other expense for the three months ended September 30, ~~2022,~~2023 was ~~$374,240,~~approximately $48,226, as compared to other expense of ~~$1,577,214~~approximately $374,240 for the three months ended September 30, ~~2021.~~2022. The change was attributable to the decrease in interest expense of ~~$563,616~~approximately $77,421 related to ~~our~~decreased debt levels and debt amortization, a gain on debt extinguishment of approximately $54,169, a gain on divestiture of approximately $345,619, other income of approximately $1,978, and was offset with the recording of an increase in financing costs of approximately $5,173 and the decrease in the change in the fair value of derivative liabilities of ~~$888,220, and a loss on extinguishment of debt of $268,810, which did not occur in the prior year period, all of which changes are non-cash expenses.~~approximately $148,000.
Net Loss
We incurred a net loss of ~~$1,192,057~~approximately $518,092 for the three months ended September 30, ~~2022,~~2023, a decrease of ~~$1,038,658~~approximately $673,965 compared to the prior year period in which we incurred a net loss of ~~$2,230,715. The decrease in~~approximately $1.2 million. This net loss is primarily due to ~~increased gross profit offset by increased SG&A expenses and the~~a decrease in other expenses and a decrease in SG&A expenses, as discussed above.
Nine months ended September 30, 2023 compared to Three Months ended September 30, 2022 ~~compared to Nine Months ended September 30, 2021~~
Overview
As reflected in the accompanying financial statements, during the nine months ended September 30, ~~2022,~~2023, we incurred a net loss of ~~$6,142,144~~approximately $3.6 million and cash used ~~cash~~ in operations of ~~$2,148,583,~~approximately $28,724, compared to a net loss of ~~$4,423,399~~approximately $6.1 million and ~~used~~use of cash in operations of ~~$1,586,677~~approximately $2.1 million for the nine months ended September 30, ~~2021.~~2022. As of September 30, ~~2022,~~2023, we had a stockholders’ deficit of ~~$3,349,654.~~approximately $5.4 million.
The following is a more detailed discussion of our financial condition and results of operations for the period presented, along with prior periods.
43
Revenue
The following table presents our net revenues, by revenue source, and the period-over-period percentage change, for the period presented:

Nine Months Ended
September 30,
Nine Months Ended
September 30,
2022 2021 2023 2022
Revenue Source Revenue Revenue % Change Revenue Revenue % Change
Distributors $ 635,605 $ 784,023 (19 )% $ 384,416 $ 635,605 (40 )%
Amazon and Walmart Marketplace 110,478 119,428 (7 )%
Amazon 31,828 110,478 (71 )%
Online Sales 30,494 57,725 (47 )% 17,965 30,494 (41 )%
Retail 2,616,679 883,825 196 % 2,545,841 2,616,679 (3 )%
Shipping 10,319 15,039 (31 )% 3,163 10,319 (69 )%
Sales Returns and Allowances (104,500 ) (61,041 ) 71 % (91,000 ) (104,500 ) (13 )%
Net Revenues $ 3,299,075 $ 1,798,999 79 % $ 2,892,213 $ 3,299,075 (12 )%
The following table presents our net revenues by product lines for the ~~periods~~period presented:
Nine Months Ended
September 30, Nine Months
September 30,
2022 2021 2023 2022
Product Line Revenue Revenue % Change Revenue Revenue % Change
Hemp Energy Drinks $ 148,725 $ 316,124 (53 )%
Energy Drinks $ 16,749 $ 148,725 (89 )%
CBD Energy Waters 56,388 75,096 (25 )% 36,329 56,388 (36 )%
Lemonade Drinks 571,285 568,624 - % 381,131 571,285 (33 )%
Apparel 179 1,332 (87 )% - 179 (100 )%
Retail 2,616,679 883,825 196 % 2,545,841 2,616,679 (3 )%
Shipping 10,319 15,039 (31 )% 3,163 10,319 (69 )%
Sales returns and allowance (104,500 ) (61,041 ) 71 % (91,000 ) (104,500 ) (13 )%
Net Revenues $ 3,299,075 $ 1,798,999 83 % $ 2,892,213 $ 3,299,075 (12 )%
During the nine months ended September 30, ~~2022,~~2023, we reported net revenues of ~~$3,299,075,~~approximately $2.89 million, which is ~~an increase~~a decrease of ~~$1,500,076,~~approximately $406,862, or ~~83%~~approximately 12%, compared to net revenues of ~~$1,798,999~~approximately $3.299 million for the ~~nine~~three months ended September 30, ~~2021. An increase~~2022. A decrease of ~~$1,732,854~~approximately $70,838 of our revenue is attributable to ~~increased~~a decrease in retail revenue, while our ~~product sales~~remaining net revenue decreased in net revenue by $232,778. We attribute the significant increase in retail revenue to attaining a larger percentage of the territory in which the Company distributes, including the addition of a third distribution hub in late fiscal 2021 and the hiring of additional employees to service this territory.approximately $336,024. We attribute the decrease in ~~product sales~~retail revenue to ~~certain delays in production~~a loss of a ~~new~~vendor that we purchase certain products from and the subsequent loss in distribution to customers that we sold those products to. We attribute the decrease in remaining net revenue to financing the Company’s product line and existing product lines, as well as to a change-over in our customer mix from the prior period due to a non-repetitive, regional, one-off customer relationship in the prior period and a different regional customer imposing slotting fees in the current period (which fees we declined to pay).line. We anticipate that ~~the rollout of our drink products with a national retailer that commenced late in the third quarter~~revenue will continue to decrease in ~~the remaining~~ fiscal year 2022. Additionally, the Company experienced delays in the rebranding of our hemp product line and the subsequent production. We expect that our product revenue will increase in the remaining fiscal year 20222023 compared to fiscal year ~~2021, and we do not anticipate further delays. Further, the Company hired additional sales personnel to lead sales efforts~~2022, as the Company ~~began to expand into new territories late~~has sold its interest in Ooh La Lemin lemonades, and expects closing one of its two distribution centers located in Greer, SC during the ~~third quarter.~~remaining three months of fiscal year 2023. The Company anticipates ~~to continue signing more favorable agreements with larger, reputable tier 1~~evaluating and mid-size distributors, big box stores, and grocery chains. In addition, we anticipate that our retail revenue will continue to increase as we broaden our customer base with increased distribution to additional grocery and convenience chains.reorganize its operations in the remaining three months of fiscal year 2023.
Cost of Revenues
Cost of revenues consists primarily of expenses associated with products sold to distributors and resellers, including product and shipping costs. Costs also include credit card fees, fees incurred for sales that occur on Amazon.com, and other transaction fees related to the processing of consumer transactions. Typically, we expect that the cost of revenues will increase as a direct correlation to increases in sales. Thus, our cost of revenues increases on an absolute basis versus on a percentage of sales basis. At the same time, when sales increase, thereby increasing our orders with our co-packers, our cost of products decreases because of the volume discounts we receive from our co-packers.
54
During the nine months ended September 30, ~~2022,~~2023, we reported cost of revenues of ~~$2,608,712,~~approximately $2.2 million, which is ~~an increase~~a decrease of ~~$1,164,985,~~approximately $378,111, or ~~81%~~approximately 14%, compared to ~~$1,443,727~~approximately $2.6 million for the nine months ended September 30, ~~2021.~~2022. This ~~increase~~decrease is attributed to ~~an increase~~the decrease in sales in both our products and retail distribution in ~~2022,~~2023, compared to the prior year ~~period. The cost of revenues increase was comparable to the increase in revenues for the same~~ period. We expect that we will continue to see ~~an increased~~comparable cost of revenues to the revenues in the remaining fiscal year ~~2022, primarily due to an anticipated increase in revenues.~~2023. In addition, as the ~~cost of shipping our products~~Company continues to ~~remain elevated,~~evaluate and reorganize, we also anticipate increased costs for obtaining our ingredients for our products, increased costs for production of our products, and increased costs of shipping our products. We continue to seek alternative methods to reduce costs for production andexpect the cost of ~~shipping our products in fiscal year 2022.~~revenue to decrease.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses (“SG&A&A”) expenses consist primarily of professional fees, salaries and wages, advertising, rent, travel expenses, sponsorships, and general office and administrative expenses related to maintaining our facilities. Selling, general and administrative expenses ~~increased~~decreased in the nine months ended September 30, ~~2022,~~2023, to ~~$3,045,895~~ approximately $2.9 million from ~~$1,968,841, an increase~~approximately $3 million, a decrease of ~~$1,077,054~~ approximately $187,608 over the same period last year. The ~~increase~~decrease was driven by ~~increased~~decreased operating expenses associated with ~~hiring additional sales employees,~~lower advertising costs, wages and ~~marketing, travel expenses,~~salaries, legal ~~and accounting fees, rent~~expense related to ~~an additional distribution warehouse,~~corporate activity, and rent, vehicle, and shipping expenses ~~and partially offset by lower professional fees.~~associated with selling our ownership interests in Ooh La Lemin. We expect that, as we ~~expand~~decrease our business operations, SG&A expenses will continue to ~~increase.~~decrease.
We expect that as we ~~expand~~reorganize and evaluate our business operations, ~~and continue to incur additional corporate-related expenses associated with our status as a fully registered issuer with the SEC under the 1934 Act,~~ SG&A expenses will continue to ~~increase.~~decrease.
Other Income and Expenses
Other expense for the nine months ended September 30, ~~2022,~~2023 was ~~$3,786,612,~~approximately $1.4 million, as compared to other expense of ~~$2,809,830~~approximately $3.8 million for the nine months ended September 30, ~~2021.~~2022. The change was attributable to the decrease in interest expense of ~~$1,146,128~~approximately $87,813 related to ~~our~~ debt levels and debt amortization, ~~the increase in~~ the change in the fair value of derivative liabilities of ~~$658,411, an increase in our loss on extinguishment of debt of $1,237,011, and financing costs of $260,000,~~approximately $1.5 million, which did not occur in the ~~prior year~~current period, ~~all~~gain on divestiture of ~~which changes are non-cash expenses.~~approximately $345,619, and a gain on the loss on debt extinguishment of approximately $413,689, and was offset with increase in in the recording of financing costs of approximately 34,173.
Net Loss
We incurred a net loss of ~~$6,142,144~~approximately $3.6 million for the nine months ended September 30, ~~2022, an increase~~2023, a decrease of ~~$1,718,745~~approximately $2.5 million compared to the prior year period in which we incurred a net loss of ~~$4,423,399.~~approximately $6.1 million. This decrease in net loss is primarily due to ~~increase in gross profit, offset by increased SG&A expenses and the increase~~a significant decrease in other expenses, as discussed above.
Liquidity and Capital Resources
Going Concern
We have incurred operating losses since inception and have negative cash flow from operations since inception. As of September 30, 2022, we had a stockholders’ deficit of $3,349,654 and we incurred a net loss of $6,142,144 during the nine months ended September 30, 2022. We also utilized cash in operations of $2,148,583 during the nine months ended September 30, 2022. As a result, our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient cash flow from operations to meet our obligations. We intend to continue to seek additional debt or equity financing to continue our operations.
~~Our consolidated~~The accompanying financial statements have been prepared on a going concern basis, which ~~implies we may~~contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, in the nine months ended September 30, 2023, the Company recorded a net loss of $3,645,215 and cash used in operations of $28,724 and had a stockholders’ deficit of $5,352,669 as of that date. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the financial statements being issued. In addition, the Company’s independent registered public accounting firm, in its report on our December 31, 2022 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The ability of the Company to ~~meet our obligations~~continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue ~~our operations for~~as a going concern.
5
At September 30, 2023, the ~~next fiscal year.~~Company had cash on hand in the amount of $369,931. The continuation of ~~our~~the Company as a going concern is dependent upon ~~our~~its ability to obtain necessary debt or equity financing to continue operations until ~~we begin~~it begins generating positive cash flow. ~~Refer to auditors going concern.~~
6
~~There is no~~No assurance can be given that ~~we will ever be profitable or that debt or equity~~any future financing will be available or, if available, that it will be on terms that are satisfactory to usthe Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the ~~amounts, on terms, and at times deemed acceptable to us, if at all. The issuance~~case of ~~additional equity securities by us would result in a significant~~debt financing or cause substantial dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business, as planned, and as a result may be required to scale back or cease operations for our ~~business, the result of which would be that our~~ stockholders, ~~would lose some~~in case or all of their investment. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.equity financing.
Notes Payable ~~with Related Parties~~
~~Notes payable with related parties consists of the following at September 30, 2022 and December 31, 2021:~~

September 30, 2022

December 31, 2021

Note payable – related party (a) $ 1,352,651 $ 1,352,651
Note payable – related party (b) 260,000 -
Note payable – related party – past due (c) 125,500 125,500
Note payable – related party (d) 49,000 53,500
Total notes payable – related parties 1,787,151 1,531,651
Notes payable – related parties, current portion (1,787,151 ) (6,000 )
Notes payable – related parties, net of current portion $ - $ 1,525,651
~~(a)~~ On April 4, 2019, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $1,500,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on April 4, 2023, at which time all outstanding principal amounts and accrued interest are due and payable. At September 30, 2022 and December 31, 2021, outstanding principal was $1,352,651 and $1,352,651, respectively.
~~(b)~~ On May 6, 2022, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $300,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on May 6, 2023, at which time all outstanding principal amounts and accrued interest are due and payable. At September 30, 2022, the outstanding principal was $260,000.
~~(c)~~ On August 29, 2019, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $200,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on August 29, 2023, at which time all outstanding principal amounts and accrued interest are due and payable. At September 30, 2022 and December 31, 2021, outstanding principal was $125,500 and $125,500, respectively.
~~(d)~~ On February 19, 2019, the Company issued an unsecured Standard Promissory Note in Favor of Robert Clark, as lender, in the original principal amount of $70,000. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The note bears no interest. Principal payments of $500 per month commenced in March 2019, with final payment due in March 2021. On March 15, 2022, the Company issued an Amendment to the original issued Standard Promissory Note in Favor of Robert Clark for the remaining outstanding principal of $58,000. Principal payment of $500 per month, with final payment due in March 2023. The outstanding principal balance of this note at December 31, 2021 was $53,500. During the nine months ended September 30, 2022, the Company made principal payments of $4,500, leaving an outstanding principal balance of $49,000 at September 30, 2022.
7
At December 31, 2021, accrued interest on notes payable to related parties was $95,873. During the nine months ended September 30, 2022, the Company added $31,035 of additional accrued interest, leaving an accrued interest balance on the notes payable to related parties of $126,908 at September 30, 2022. Accrued interest is included in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheets.
~~Notes Payable~~
Notes payable consists of the following at September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:

September 30, 2022

December 31, 2021

September 30,
2023

December 31,
2022

Note payable (a) $ 28,606 $ 33,312 $ 22,025 $ 26,994
Note payable (b) 46,576 - 39,730 44,550
Note payable (c) 41,108 - 39,261 40,103
Note payable (d) 340,000 - 205,576 250,000
Note payable (e) 250,000 - 291,043 626,388
Less debt discount (e) (155,281 ) -
Note payable (f) 62,857 -
Note payable (g) 77,968 -
Note payable (h) - -
Note payable (i) 289,406 -
Note payable (j) 16,206 -
Total notes payable 1,044,072 988,035
Less debt discount (83,973 ) (218,481 )
Total notes payable, net 551,009 33,312 960,099 769,554
Notes payable, current portion (479,260 ) (7,974 ) (903,264 ) (712,499 )
Notes payable, net of current portion $ 71,749 $ 25,338 $ 56,835 $ 57,055
(a) On August 21, 2021, the Company financed the purchase of a vehicle for $34,763, after making a down payment of $20,000. The loan term is for 60 months, annual interest rate of 5.44%, with monthly principal and interest payments of $665, and secured by the purchased vehicle. At December 31, ~~2021,~~2022, the loan balance was ~~$33,312.~~$26,994. During the nine months ended September 30, ~~2022,~~2023, the Company made principal payments of ~~$4,706,~~$4,969, leaving a loan balance of ~~$28,606~~$22,025 at September 30, ~~2022, of which $1,587 was recorded as the current portion of loan payable on the accompanying Condensed Consolidated Balance Sheet.~~2023.
(b) On September 30, 2022, the Company financed the purchase of a vehicle for $46,576, after making a no down payment. The loan term is for 60 months, annual interest rate of 9~~.44~~%9.44%, with monthly principal and interest payments of $980, and secured by the purchased vehicle. ~~As of~~At December 31, 2022, the loan balance was $44,550. During the nine months ended September 30, ~~2022, no~~2023, the Company made principal payments ~~were made,~~of $4,820, leaving a loan balance of ~~$46,576~~$39,730 at September 30, ~~2022, of which $1,846 was recorded as the current portion of loan payable on the accompanying Condensed Consolidated Balance Sheet.~~2023.
(c) In April 2021, the Company entered into a Line of Credit Agreement with Wells Fargo Bank. The Line of Credit is personally guaranteed by Robert Clark, the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $42,000. Advances under this line of credit bear interest at the rate of ~~11.50 percent~~11.50% per annum. The line of credit matures in 2023, at which time all outstanding principal amounts and accrued interest are due and payable. AtAs of September 30, 2023 and December 31, 2022, the outstanding principal was ~~$41,108,~~$39,261 and $40,103, respectively, which was recorded as the current portion of loan payable on the accompanying ~~Condensed~~ Consolidated Balance Sheet.
(d) On March 25, 2022, the Company entered into a secured debenture with an otherwise unaffiliated individual in the principal amount of $250,000 that was due on March 23, 2023. On March 23, 2023, the Company entered into a First Amendment to Secured Debenture (the “First Amendment”) to amend a Secured Debenture (the “Debenture”), dated as of March 25, 2022. The Debenture is amended and restated in its entirety with the following terms (i) maturity date was extended to March 24, 2024; (ii) interest accrues on the outstanding principal at a rate equal to 12% per annum; (iii) monthly payments of principal and interest shall be made in the amount of $22,212, starting April 24, 2023 until the maturity date, at which date the entirety of the balance of principal plus interest is due. The secured debenture is secured by nine identified motor vehicles of the Company. At December 31, 2022, the outstanding balance of the secured debentures amounted to $250,000. During the nine months ended September 30, 2023, the Company made principal payments of $44,424, leaving a loan balance of $ 205,576 at September 30, 2023.

~~(d)~~In connection with the issuance of the original debenture in 2022, the Company issued to the lender 25 million shares of the Company’s common stock at a price of $0.004 per share. The Company determined the fair value of the 25 million shares was $135,000, which was recorded as a debt discount against the secured debenture. At December 31, 2022, the unamortized debt discount was $31,531. During the nine months ended September 30, 2023, the Company amortized debt discount of $31,531 to interest expense on the loan, leaving no remaining unamortized debt discount at September 30, 2023.
6
(e)
~~On September 30,~~During the year ended December 31, 2022, the Company entered into a secured ~~non-interest bearing~~non-interest-bearing advance ~~agreement~~agreements with an unaffiliated third ~~party~~parties for the purchase of future receipts/revenues. Under the agreements, the Company received aan aggregate lump sum payment of ~~$250,000,~~$561,957, and, in return, the ~~lender receives~~purchaser received a secured right to collect a fix sum of future receipts/revenue of ~~$340,000~~$798,456 to be collected by the Company. During the nine months ended September 30, 2023, the Company entered into additional secured non-interest bearing advance agreements for which the Company received an aggregate lump sum payment of $501,000, and, in return, the purchaser received a secured right to collect a fix sum of future receipts/revenue of $597,500 to be collected by the Company. In accordance with the ~~agreement,~~agreements, the Company agreed to sell, assign, and transfer to the ~~Purchaser~~purchaser of all the Company’s payments, receipts, settlements, and funds paid to or received by or for the account of the Company from time to time on and after the ~~date hereof~~dates of the agreements in payment or settlement of the Company’s existing and future accounts, payment intangibles, credit, debit, and/or stored value card transactions, contract rights, and other entitlements arising from or relating to the payment of monies from the Company’s customers and/or other payors or obligors. The ~~loan is payable in~~agreements require aggregate daily to weekly payments ~~of $7,728, is~~ranging from $1,291 to $1,958 The Company’s obligations under the agreements are secured by ~~these~~the assets described above, and is guaranteed by Robert Clark, the Company’s Chief Executive Officer. ~~Upon~~As of December 31, 2022, the outstanding balance to be paid amounted to $626,388. During the nine months ended September 30, 2023, the Company entered into additional agreements of $586,750, and made payments of $922,096, leaving an aggregate outstanding amount to be paid of $291,043 at September 30, 2023.
During the year ended December 31, 2022, upon execution of the advance and receipt of funds, the Company recorded the difference of ~~$90,000~~$236,499 between the cash collected and the face amount of the ~~note~~obligation as a ~~note discount,~~“note discount” and will amortize the ~~note discount~~“note discount” as interest expense over the life of the advance. At December 31, 2022, the unamortized “note discount” was $186,950. During the nine months ended September 30, 2023, the recorded an additional unamortized “note discount” of $191,150 related to new advance agreements, and the Company amortized “note discount” of $294,127 to interest expense on the obligation. As of September 30, 2023, the unamortized “note discount” was $83,973.
8
~~(e)~~(f) On March ~~25, 2022,~~9, 2023, the Company entered into a ~~secured debenture~~Line of Credit Agreement with ~~an otherwise unaffiliated individual~~American Express National Bank. The Line of Credit is personally guaranteed by Robert Clark, the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $85,000. Advances under this line of credit bear interest at the rate of 19.32% per annum. The line of credit matures on September 9, 2024, at which time all outstanding principal amounts and accrued interest are due and payable. The line of credit requires minimum monthly payments of $5,572. At September 30, 2023, the outstanding principal was $62,857.
(g) On March 7, 2023, the Company entered into a Line of Credit Agreement with Celtic Bank. The Line of Credit is personally guaranteed by Robert Clark, the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $200,000. Advances under this line of credit bear interest at the rate of 35.90 percent per annum. The line of credit matures on March 7, 2024, at which time all outstanding principal amounts and accrued interest are due and payable. At September 30, 2023, the outstanding principal was $77,968.
(h) On June 30, 2023, the Company entered into a note payable with IQ Financial, Inc. in the principal amount of ~~$250,000.~~$110,000, with an original issue discount of $10,000, resulting in net proceeds for $100,000. The ~~secured~~note has no stated interest and is due on July 31, 2023. For so long as the note remains unpaid, the Company shall pay within two days of receipt of customer payments on specific customer invoices listed in the note payable. At September 30, 2023, there was no outstanding balance.
The original issue discount of $10,000 was recorded as a debt discount against the note payable, ~~matures on March 24,~~at September 30, 2023, there was no remaining unamortized debt discount.
(i) On May 15, 2023, the Company entered into a Revolving Credit Agreement (the “Revolver”) with a vendor. The Revolver allows the Company to purchase goods from its vendor time to time. The unpaid principal balance of the Revolver may not exceed $250,000 through May 31, 2023, $225,000 through July 31, 2023, and $200,000 through $200,000 through December 31, 2023, at any one time. The Revolver has a maturity date of December 31, 2023 and bears no interest atrate. At September 30, 2023, the ~~rate of 0.97 percent per annum. The secured debenture is secured by nine (9) identified motor vehicles~~outstanding balance of the ~~Company.~~ Revolver was $289,406.
In connection with the issuance of the ~~debenture,~~Revolver, the Company issued to the ~~lender 25~~vendor 28 million shares of the Company’s common stock at a price of ~~$0.004~~$0.0045 per share. The Company determined the fair value of the 2528 million shares was ~~$135,000,~~$126,000, which was recorded as ~~a debt discount against~~financing costs in the ~~secured debenture. As~~condensed consolidated statement of operations during the nine months ended September 30, ~~2022,~~2023.
(j) On June 2, 2023, the Company entered into a note payable with RFMD-LLC in the principal amount of $16,206, with an interest rate of 8% per annum, and a maturity date of December 31, 2023. The note was issued in related to the termination of an operating lease (see Note 10). At September 30, 2023, the outstanding ~~balance~~principal was $16,206. original issue discount of ~~the secured debentures amounted to $250,000~~$10,000, resulting in net proceeds for $100,000. The note has no stated interest and ~~the unamortized debt discount was $65,281, which was recorded~~is due on July 31, 2023. For so long as the ~~current portion~~note remains unpaid, the Company shall pay within two days of ~~loan payable~~receipt of customer payments on specific customer invoices listed in the ~~accompanying Condensed Consolidated Balance Sheets.~~note payable.
7
At December 31, ~~2021, there was no~~2022 on item (d), accrued interest on the notes ~~payable.~~payable was $1,874. During the nine months ended September 30, ~~2022,~~2023, the Company added ~~$1,262~~$11,795 of additional accrued interest on item (d), leaving ~~$1,262~~$13,669 of accrued interest balance on the notes payable item (d) at September 30, ~~2022.~~2023. Accrued interest inis included in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheets.
As of December 31, 2022, the unamortized debt discount was $218,481. During the nine months ended September 30, 2023, the Company added $201,150 of debt discount related to the issuance of debentures, and amortized debt discount of $335,658 to interest expense on the loans. As of September 30, 2023, the unamortized debt discount was $83,973.
Secured Convertible Debentures
Secured debentures that are payable to an otherwise unaffiliated third party consists of the following as of September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:

September 30, 2022

December 31, 2021

September 30,
2023

December 31,
2022

YA II PN, Ltd. $ 500,000 $ 3,000,000
Mast Hill 595,000 -
Mast Hill Note 1 119,306 595,000
Mast Hill Note 2 431,744 -
Mast Hill Note 3 230,000 -
Mast Hill Note 4 55,707 -
Mast Hill Note 5 63,000 -
Less debt discount (564,416 ) (2,150,067 ) (236,783 ) (183,940 )
Secured debentures, net $ 530,584 $ 849,933 $ 662,974 $ 411,060
~~YA II PN, Ltd.~~
During the year ended December 31, 2021, the Company issued secured debentures to an otherwise unaffiliated third-party investor (the “Selling Stockholder”) in the aggregate of $4,500,000. The debentures are secured by all tangible and intangible assets of the Company and are also convertible into shares of our common stock at a conversion price of $0.03 per share or a per share amount equivalent to the weighted average (among the principal of the debentures) of 76.7% of the lowest volume weighted average price (“VWAP”) of the Company’s common stock during the 15 trading days immediately preceding the conversion date, whichever is lower. As the ultimate determination of shares to be issued upon conversion of these debentures can exceed the current number of available authorized shares, we determined that the conversion features of these convertible debentures are not considered indexed to our Company’s own capital stock and characterized the fair value of the conversion features as derivative liability. In connection with the issuances of the debentures, the Company granted to the Selling Stockholder warrants to purchase up to 150 million shares of the Company’s common stock. The warrants are exercisable at $0.03 per share. Twenty million of the warrants will expire on May 14, 2023, fifty million of the warrants will expire on February 10, 2024 and 100,000,0000 of the warrants will expire on August 20, 2024. As a result of these issuances and grants, we incurred the following (a) derivative liability of $3,982,000 related to the conversion feature of the debentures; (b) relative fair value of the warrants granted of $1,581,000; and (c) and original issue discounts of $195,000 of the debentures for a total of $5,758,000, of which, $4,423,000 was accounted as debt discount and the remaining $1,335,000 as financing costs. The debt discount is being amortized to interest expense over the term of the corresponding debentures.
9
On May 5, 2022, the Company issued similar debentures to the Selling Stockholder in the aggregate amount of $500,000. The debentures bear interest at a rate of 8% per annum, secured by all of the tangible and intangible assets of the Company and are also convertible into shares of the Company’s common stock at a conversion price of $0.03 per share or 80% of the lowest daily VWAP during the 10 trading days immediately preceding the conversion date. As the ultimate determination of shares of common stock to be issued upon conversion of these debentures can exceed the current number of available authorized shares, the Company determined that the conversion features of these debentures are not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as a derivative liability (see Note 10). In connection with the issuances of these debentures, the Company also granted to the selling stockholder warrants to purchase up to 8,333,333 shares of common stock. The warrants are exercisable at $0.03 per share and will expire in three years from their grant date. As a result of these issuances, the Company incurred the following (a) derivative liability of $680,000 related to the conversion feature of the debentures; (b) relative fair value of the warrants granted of $81,000; and (c) and original issue discount of $25,000 for a total of $786,000, of which, $500,000 was accounted as debt discount and the remaining $286,000 as financing costs. The debt discount is being amortized to interest expense over the term of the corresponding debentures. During the nine months ended September 30, 2022, the Company amortized debt discount of $198,335 to interest expense.
During the nine months ended September 30, 2022, the note holder converted principal of $3,000,000 and accrued interest of $140,876, or a total $3,140,876, into 775,748,690 shares of common stock with a fair value of $6,469,848. The Company followed the general extinguishment model to record the conversions and settlement of the debt. As such, the Company removed the debt and accrued interest totaled $3,140,876, the related unamortized debt discount totaled $1,784,879 at the date of conversion. In addition, the Company revalued the derivative related to the bifurcated conversion option to its fair value of $3,972,000 at the date of the conversion and removed that amount. As a result, the Company recorded a loss on extinguishment of debt of $1,141,850.
~~As of December 31, 2021, the outstanding balance of the secured debentures amounted to $3,000,000, with an unamortized debt discount of $2,150,067, or a net balance of $849,933.~~
As of September 30, 2022, the outstanding balance of the secured debentures amounted to $500,000, with an unamortized debt discount of $301,645, or a net balance of $198,355. During the nine months ended September 30, 2022, the Company amortized debt discount of $563,542 to interest expense on the YA II PN, Ltd. loans.
~~As of September 30, 2022, 124,958,049 shares of common stock were potentially issuable under the conversion terms of the outstanding debentures.~~
Mast Hill
On July 28, 2022, the Company issued senior secured debentures to an otherwise unaffiliated third-party investor (the “Investor”) in the aggregate of $595,000. The debentures bear interest at a rate of 10% per annum, mature on July 28, 2023, and ~~are~~is convertible into shares of our common stock at a conversion price of $0.0045 per share. If the Company issues subsequent equity instruments at an effective price per share that is lower than the conversion price of $0.0045 per shares, then the conversion price shall be reduced, at the option of the Holder, to a price equal to the Weighted Average Price (as defined), provided, further, that if the conversion price is equal to or less than $0.003, then the conversion price shall be reduced at the option of the Holder to a price equal to the lower price. The senior secured debentures ~~are~~is secured by all of the Company’s assets and the assets of each of its subsidiaries pursuant to the Security Agreement. The security interest granted to the Investor under the Security Agreement iswas subordinate to the continuing security interest that remains in effect pursuant to the previous grant of a security interest in connection with a ~~still-outstanding~~then outstanding debenture to an earlier investor all tangible and intangible assets. In connection with the issuances of the debentures, the Company granted to the ~~Selling Stockholder~~Investor warrants to purchase up to 100 million shares of the Company’s common stock, which expire on July 28, 2027. The warrants are exercisable at $0.0045 per share. As a result of these issuances and grants, we incurred the following (a) relative fair value of the warrants granted of $223,000; and (b) original issue discounts of $92,325 of the debentures for a total of $315,325 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures. As of ~~September 30,~~December 31, 2022, the unamortized debt discount was ~~$262,771.~~
$183,940. During the nine months ended September 30, 2023, the Company amortized debt discount of $168,607 to interest expense on the loan. As of September 30, 2023, the unamortized debt discount was $15,333.
As of December 31, 2022 ~~147,745,854~~the balance due under the obligation was $595,000. During the nine months ended September 30, 2023, the Company converted $475,694 of principal and accrued interest into 239,500,000 shares of common stock with a fair value of $1,075,355 resulting in a loss on extinguishment of debt of $513,520. As of September 30, 2023, $119,306 was due under the note.
Mast Hill Debenture 2
On March 13, 2023, the Company issued an additional senior secured debenture to the Investor in the aggregate of $475,000. The debenture bears interest at a rate of 10% per annum, matures on March 13, 2024, and is convertible into shares of our common stock at a conversion price of $0.0045 per share.
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At our option, we have the right to redeem, in full, the outstanding principal and interest under the debenture prior to its maturity date; provided, that, as of the date of the then-holder’s receipt of the redemption notice, there has not been an Event of Default. We must pay an amount equal to the principal amount being redeemed plus outstanding and accrued interest thereon, as well as a $750 administrative fee (the “Redemption Amount”). We must provide seven Trading Days’ (as such term is defined in the debenture) prior notice to the then-holder of the debenture of our intent to make a redemption. If such notice of redemption is received six months after the Issue Date, the then-holder has the right to convert any or all of such to-be-prepaid amount into shares of our Common Stock in accordance with the conversion provisions of the debenture prior to such redemption.
Further, commencing on May 10, 2023, and continuing on the tenth day of each calendar month thereafter, we are required to redeem an amount equivalent to the sum of $2.00 for each 12-count case of our beverages that we sell in the ordinary course, calculated two months in arrears. Accordingly, the first redemption payment is due and payable on May 10, 2023 for the cases sold during the month of March, 2023. Mandatory redemption payments are based upon revenues recognized by us in accordance with US GAAP for each such month, rather than upon the receipt by us of funds received from sales during a relevant month. The above-referenced seven trading days’ prior notice and conversion provisions do not apply to any of the mandatory redemption payments.
In connection with the issuances of the debentures, the Company granted to the Investor warrants to purchase up to 80 million shares of the Company’s common stock, which expire on March 13, 2028. The warrants are exercisable at $0.0045 per share. As a result of these issuances and grants, we incurred the following (a) relative fair value of the warrants granted of $150,000; and (b) original issue discounts and fees of $74,000 of the debentures for a total of $224,000 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures. During the nine months ended September 30, 2023, the Company amortized debt discount of $78,987 to interest expense on the loan. As of September 30, 2023, the unamortized debt discount was $145,013.
During the nine months ended September 30, 2023, the Company made principal payments of $43,256. As of September 30, 2023, $431,744 was due under the note.
Mast Hill Debenture 3
On April 25, 2023, the Company issued an additional senior secured debenture to the Investor in the aggregate of $230,000. The debenture bears interest at a rate of 10% per annum, matures on April 25, 2024, and is convertible into shares of our common stock at a conversion price of $0.0040 per share.
At our option, we have the right to redeem, in full, the outstanding principal and interest under the debenture prior to its maturity date; provided, that, as of the date of the then-holder’s receipt of the redemption notice, there has not been an Event of Default. We must pay an amount equal to the principal amount being redeemed plus outstanding and accrued interest thereon, as well as a $750 administrative fee (the “Redemption Amount”). We must provide seven Trading Days’ (as such term is defined in the debenture) prior notice to the then-holder of the debenture of our intent to make a redemption. If such notice of redemption is received six months after the Issue Date, the then-holder has the right to convert any or all of such to-be-prepaid amount into shares of our Common Stock in accordance with the conversion provisions of the debenture prior to such redemption.
Further, commencing on May 10, 2023, and continuing on the tenth day of each calendar month thereafter, we are required to redeem an amount equivalent to the sum of $2.00 for each 12-count case of our beverages that we sell in the ordinary course, calculated two months in arrears. Accordingly, the first redemption payment is due and payable on May 10, 2023 for the cases sold during the month of March, 2023. Mandatory redemption payments are based upon revenues recognized by us in accordance with US GAAP for each such month, rather than upon the receipt by us of funds received from sales during a relevant month. The above-referenced seven trading days’ prior notice and conversion provisions do not apply to any of the mandatory redemption payments.
In connection with the issuances of the debentures, the Company granted to the Investor warrants to purchase up to 43.6 million shares of the Company’s common stock, which expire on April 25, 2028. The warrants are exercisable at $0.0040 per share. As a result of these issuances and grants, we incurred the following (a) relative fair value of the warrants granted of $56,000; and (b) original issue discounts and fees of $28,000 of the debentures for a total of $84,300 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures. During the nine months ended September 30, 2023, the Company amortized debt discount of $32,649 to interest expense on the loan. As of September 30, 2023, the unamortized debt discount was $51,651.
As of September 30, 2023, $230,000 was due under the note.
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Mast Hill Debenture 4
On June 14, 2023, the Company issued an additional senior secured debenture to the Investor in the aggregate of $55,706. The debenture bears interest at a rate of 10% per annum, matures on June 14, 2024, and is convertible into shares of our common stock at a conversion price of $0.0040 per share.
At our option, we have the right to redeem, in full, the outstanding principal and interest under the debenture prior to its maturity date; provided, that, as of the date of the then-holder’s receipt of the redemption notice, there has not been an Event of Default. We must pay an amount equal to the principal amount being redeemed plus outstanding and accrued interest thereon, as well as a $750 administrative fee (the “Redemption Amount”). We must provide seven Trading Days’ (as such term is defined in the debenture) prior notice to the then-holder of the debenture of our intent to make a redemption. If such notice of redemption is received six months after the Issue Date, the then-holder has the right to convert any or all of such to-be-prepaid amount into shares of our Common Stock in accordance with the conversion provisions of the debenture prior to such redemption.
Further, commencing on July 10, 2023, and continuing on the tenth day of each calendar month thereafter, we are required to redeem an amount equivalent to the sum of $2.00 for each 12-count case of our beverages that we sell in the ordinary course, calculated two months in arrears. Accordingly, the first redemption payment is due and payable on July 10, 2023 for the cases sold during the month of March, 2023. Mandatory redemption payments are based upon revenues recognized by us in accordance with US GAAP for each such month, rather than upon the receipt by us of funds received from sales during a relevant month. The above-referenced seven trading days’ prior notice and conversion provisions do not apply to any of the mandatory redemption payments.
In connection with the issuances of the debentures, the Company granted to the Investor warrants to purchase up to approximately 20.9 million shares of the Company’s common stock, which expire on June 14, 2028. The warrants are exercisable at $0.0040 per share. As a result of these issuances and grants, we incurred the following (a) relative fair value of the warrants granted of $19,000; and (b) original issue discounts and fees of $8,457 of the debentures for a total of $27,457 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures. During the nine months ended September 30, 2023, the Company amortized debt discount of $15,028 to interest expense on the loan. As of September 30, 2023, the unamortized debt discount was $12,429.
As of September 30, 2023, $55,707 was due under the note.
Mast Hill Debenture 5
On August 10, 2023, the Company issued an additional senior secured debenture to the Investor in the aggregate of $63,000. The debenture bears interest at a rate of 12% per annum, matures on June 14, 2024, and is convertible into shares of our common stock at a conversion price of $0.0030 per share.
At our option, we have the right to redeem, in full, the outstanding principal and interest under the debenture prior to its maturity date; provided, that, as of the date of the then-holder’s receipt of the redemption notice, there has not been an Event of Default. We must pay an amount equal to the principal amount being redeemed plus outstanding and accrued interest thereon, as well as a $1,000 administrative fee (the “Redemption Amount”). We must provide seven Trading Days’ (as such term is defined in the debenture) prior notice to the then-holder of the debenture of our intent to make a redemption. If such notice of redemption is received six months after the Issue Date, the then-holder has the right to convert any or all of such to-be-prepaid amount into shares of our Common Stock in accordance with the conversion provisions of the debenture prior to such redemption.
Further, commencing on July 10, 2023, and continuing on the tenth day of each calendar month thereafter, we are required to redeem an amount equivalent to the sum of $2.00 for each 12-count case of our beverages that we sell in the ordinary course, calculated two months in arrears. Accordingly, the first redemption payment is due and payable on July 10, 2023 for the cases sold during the month of March, 2023. Mandatory redemption payments are based upon revenues recognized by us in accordance with US GAAP for each such month, rather than upon the receipt by us of funds received from sales during a relevant month. The above-referenced seven trading days’ prior notice and conversion provisions do not apply to any of the mandatory redemption payments.
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In connection with the issuances of the debentures, the Company granted to the Investor warrants to purchase up to approximately 28.6 million shares of the Company’s common stock, which expire on August 10, 2028. The warrants are exercisable at $0.0030 per share. As a result of these issuances and grants, we incurred the following (a) relative fair value of the warrants granted of $8,580; and (b) original issue discounts and fees of $4,390 of the debentures for a total of $12,970 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures. During the nine months ended September 30, 2023, the Company amortized debt discount of $613 to interest expense on the loan. As of September 30, 2023, the unamortized debt discount was $12,357.
As of September 30, 2023, $63,000 was due under the note.
As of September 30, 2023, no shares of common stock were potentially issuable under the conversion terms of the outstanding debentures.
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At December 31, ~~2021,~~2022, accrued interest on the convertible notes payable was ~~$54,110.~~$25,756. During the nine months ended September 30, ~~2022,~~2023, the Company added ~~$109,854~~$60,934 of additional accrued interest, and converted ~~$140,876~~$67,569 of accrued interest, ~~into common stock,~~ leaving an accrued interest balance on the convertible notes payable of ~~$23,088~~$19,121 at September 30, ~~2022.~~2023. Accrued interest inis included in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheets.
As of December 31, 2022, the unamortized debt discount was $183,940. During the nine months ended September 30, 2023, the Company added $348,727 related to the issuance of secured debentures, and amortized debt discount of $295,884 to interest expense on the loans. As of September 30, 2023, the unamortized debt discount was $236,783.
Cash Flows
In summary, our use of cash has been as follows:

For the Nine
Months Ended
September 30, 2022

Net cash used in operating activities $ (2,148,853 )
Net cash used in investing activities $ (42,923 )
Net cash provided by financing activities $ 1,758,474
For the Nine
Months Ended
September 30, 2023
Net cash provided by operating activities $ (28,724 )
Net cash provided by investing activities $ 8,475
Net cash provided by financing activities $ 350,392
Operating Activities
Cash provided by or used in operating activities primarily consists of net ~~loss~~income adjusted for certain non-cash items, including depreciation, amortization, ~~financing costs,~~ changes in allowance for doubtful accounts, loss on extinguishment of debt, and the change in the fair value of our derivative liabilities, ~~stock-based compensation,~~ and the effect of changes in working capital and other activities. Cash used ~~in operating~~inoperating activities for the nine months ended September 30, ~~2022~~2023 was ~~$2,148,583~~approximately $28,724 and consisted of a net loss of ~~$6,142,144,~~approximately $3.6 million, adjustments for non-cash items, depreciation, amortization, ~~financing costs,~~ loss on extinguishment of debt, loss on the change in fair value of derivative liabilities, ~~and stock-based compensation,~~ which in the aggregate total ~~$3,853,719,~~approximately $2,053,076, and ~~$139,842 used in~~approximately $1,534,692 provided by working capital and other activities.
Investing Activities
Cash ~~used in~~provided by investing activities for nine months ended September 30, ~~2022~~2023 was ~~$42,923~~8,475 and ~~was attributable to capital expenditures.~~consisted of trademarks associated with the sale of the Company’s interests in Ooh La Lemin.
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Financing Activities
Cash provided by financing activities for nine months ended September 30, ~~2022~~2023 was ~~$1,758,474~~approximately $350,392 and was comprised of proceeds from a notes payable of ~~$1,783,816,~~$800,930, proceeds from related party of $222,000, and proceeds from convertible debentures payable of $771,230, offset by payments on our ~~notes payable~~line of ~~$10,098,~~credit to related party of $136,500, payments of our acquisition obligations of ~~$11,446,~~$6,762, payment of our note payable of $1,251,656, and payment of finance lease obligations of ~~$3,798.~~$5,994.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies
Our discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The accounting policies that we follow are set forth in Note 2, Summary of Significant Accounting Policies, of our consolidated financial statements for the ~~period~~quarter ended September 30, ~~2022.~~2023. These accounting policies conform to accounting principles generally accepted in the United States, and have been consistently applied in the preparation of the consolidated financial statements.
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Revenue Recognition and Deferred Revenue
We sell our products, which includes our hemp energy drink, CBD energy water, CBD water, and logo apparel, to online customers or through resellers and distributors. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. We recognize revenue from product sales to customers, distributors, and resellers when products that do not require further services by us are shipped, when there are no uncertainties surrounding customer acceptance, and when collectability is reasonably assured. Sales are made to customers under terms allowing certain limited rights of return. Amounts billed to customers in sales transactions related to shipping and handling, represent revenues earned for the goods provided and are included in net sales. Costs of shipping and handling are included in cost of products sold.
We also sell our products, and beverages purchased for resale from several other beverage manufacturers, to convenience stores, grocery stores, and smoke and gift shops. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. We recognize revenue from product sales to resellers when products that do not require further services by us are shipped or delivered, when there are no uncertainties surrounding customer acceptance and when collectability is reasonably assured. Cash received by us prior to shipment is recorded as deferred revenue. Sales are made to customers under terms allowing certain limited rights of return. Amounts billed to customers in sales transactions related to shipping and handling, represent revenues earned for the goods provided and are included in net sales. Costs of shipping and handling are included in cost of products sold.
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We recognize revenue in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC Topic 606”). The underlying principle of ASC Topic 606 is to recognize revenue to depict the transfer of goods or services to a customer at the amount expected to be collected. To apply these principles, ASC Topic 606 outlines a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes:
1. Identifying the contract(s) or agreement(s) with a customer;
2. Identifying the separate performance obligations in the contract or agreement;

3. Determining the transaction price;

4. Allocating the transaction price to the separate performance obligations in the contract or agreement; and

5. Recognizing revenue as each performance obligation is satisfied.
Pursuant to ASC Topic 606, we recognize revenue when performance obligations under the terms of a contract are satisfied, which occurs typically upon the transfer of control, including the risks and rewards of ownership. With respect to us, performance is deemed to occur upon shipment or delivery of products to our customers based on the written contract terms, which is also when control is transferred.
Our revenue earned is recognized when we satisfy a single performance obligation by transferring control of our products to a customer. We have determined that disaggregated revenue by net sales by revenue source would be meaningful and allow investors to understand our business activities, historical performance, or future prospects. Disaggregated sales by revenue source, which includes sales to distributors, online sales, sales through Amazon, and distribution sales. This is the same information used by our Chief Operating Decision Maker for evaluating the financial performance of our operations and making resource decisions. We also sell merchandise and apparel that comprises approximately 1% of our gross annual sales, and solely exists to promote our beverages. Merchandise and apparel sales are included with the gross sales for our one operating segment.
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During the prior year, the Company consolidated and restructured its operations. The Company now operates in one segment for the manufacture and distribution of our products and those of otherwise unrelated beverage products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities inin: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements.
Stock-Based Compensation
FASB’s ASC Topic 718, Stock Compensation (formerly, FASB Statement 123R), prescribes accounting and reporting standards for all stock-based payment transactions in which employee and non-employee services are acquired. We measure the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Fair value for restricted stock awards is valued using the closing price of our Common Stock on the date of grant. For our nine months ending September 30, ~~2022~~2023 and ~~2021,~~2022, we recognized ~~$18,500 and $55,800, respectively of~~no stock-based compensation expense. See Note ~~13,~~12, Share-Based Compensation, of our consolidated financial statements for the nine months ended September 30, ~~2022,~~2023, for an additional description of our stock-based compensation that had a material effect on our consolidated financial statements.
Emerging Growth Company Status
On April 5, 2012, the JOBS Act, was enacted. The JOBS Act provides that, among other things, an “emerging growth company” can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. As an emerging growth company, we have irrevocably elected to take “opt out” of taking advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth public companies on a case-by-case basis.
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We intend to rely on certain of the other exemptions and reduced reporting requirements provided by the JOBS Act. As an emerging growth company, we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b), and (ii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis).
We will remain an emerging growth company until the earlier to occur of (1) the last day of our fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenues of at least $1.07 billion, or (c) in which we are deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our common shares that is held by non-affiliates exceeds $700 million as of the last day of our second quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
We are also a “smaller reporting company” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
13
Recently Issued Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies to our consolidated financial statements for the period ended September 30, ~~2022~~2023 for a discussion of recent accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A smaller reporting company is not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure control and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, ~~2022,~~2023, the period covered in this Report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, ~~Act~~as amended, is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
14
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, ~~2022,~~2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitations on the Effectiveness of Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
14
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
~~We know~~
The Company, together with, in some instances, certain of ~~no other material pending legal proceedings to which we or any of our subsidiaries~~its directors and officers, is a ~~party or to which any~~defendant in legal actions involving breach of ~~our assets or properties, or the assets or properties of any of our subsidiaries, are subject~~receivables contract and various other claims incident to the ~~best~~conduct of ~~our knowledge, no adverse legal activity is anticipated or threatened. In addition, we do not know~~businesses. Management does expect the Company to suffer additional material liability by reason of ~~any such proceedings contemplated by any governmental authorities.~~these actions.
We know of no material proceedings in which any of our directors, officers, or affiliates, or any registered or beneficial stockholder is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 ~~Act~~ and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None that has not been previously disclosed in a Current Report on Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 5. OTHER INFORMATION
None.
15
ITEM 6. EXHIBITS
The following exhibits are filed with or incorporated by reference into this Quarterly Report.

3.1 Amended and Restated Certificate of Incorporation is incorporated herein by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

3.2 Amended and Restated By-Laws is incorporated herein by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

3.3 Certificate of Designation of the Preferences, Rights, and Limitations of the Series B Preferred Stock is incorporated herein by reference to Exhibit 3.3 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

3.4 Certificate of Designation of the Preferences, Rights, and Limitations of the Series C Preferred Stock is incorporated herein by reference to Exhibit 3.4 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

3.5 Certificate of Designation of the Preferences, Rights, and Limitations of the Series D Preferred Stock is incorporated herein by reference to Exhibit 3.5 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
15
3.6 Certificate of Amendment to Amendment and Restated Certificate of Incorporation, is incorporated herein by reference to Exhibit 3.6 of Amendment No. 1 to the Company Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on October 26, 2020.
3.7 Certificate of Amendment to the amended and restated Certificate of Incorporation is incorporated herein by reference to Exhibit 3.7 of the Company’s Current Report on Form 8-K, filed with the SEC on February 17, 2023.
3.8 Certificate of Amendment to the amended and restated Certificate of Incorporation is incorporated herein by reference to Exhibit 3.8 of the Company’s Current Report on Form 8-K, filed with the SEC on February 17, 2023.
4.1 Form of Debenture is incorporated herein by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

4.2 Warrant is incorporated herein by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
16
4.3 Form of Stand-alone Debenture is incorporated herein by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-1 (File No.333-239883), filed with the SEC on December 14, 2020.

4.4 Form of Secured Convertible Debenture of the registrant sold and issued to YAII PN, Ltd., on February 11, 2021 is incorporated herein by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K, filed with the SEC on February 18, 2021.

4.4a Form of Secured Convertible Debenture of the registrant sold and issued to YAII PN, Ltd., on February 11, 2021 is incorporated herein by reference to Exhibit 4.4a of the Company’s Quarterly ~~Current~~ Report on Form 10-Q, filed with the SEC on November 15, 2021.

4.5 Form of Warrant of the registrant granted to YAII PN, Ltd., on February 11, 2021 is incorporated herein by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K, filed with the SEC on February 18, 2021.
4.6 Form of Secured Convertible Debenture of the registrant sold and issued to YAII PN, Ltd., effective August 23, 2021 is incorporated herein by reference to Exhibit 4.6 of the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2021.

4.7 Form of Warrant of the registrant granted to YAII PN, Ltd., effective August 23, 2021 is incorporated ~~herein~~here8in by reference to Exhibit 4.7 of the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2021.

4.8 Form of Secured Convertible Debenture of the registrant sold and issued to YAII PN, Ltd., effective May 4, 2022 is incorporated herein by reference to Exhibit 4.8 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022.

4.9 Form of Warrant of the registrant granted to YAII PN, Ltd., effective May 4, 2022 is incorporated herein by reference to Exhibit 4.9 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022.

4.10 Form of Secured Convertible Senior Note of the registrant sold and issued to Mast Hill Fund, L.P., dated July 28, 2022 is incorporated herein by reference to Exhibit 4.10 of the Company’s Current Report on Form 8-K, filed with the SEC on August 3, 2022.

4.11 Form of Warrant of the registrant granted to Mast Hill Fund, L.P., dated July 28, 2022 is incorporated herein by reference to Exhibit 4.11 of the Company’s Current Report on Form 8-K, filed with the SEC on August 3, 2022.

4.12 Form of Secured Convertible Senior Note of the registrant sold and issued to Mast Hill Fund, L.P., for a transaction that closed and funded on March 15, 2023 is incorporated herein by reference to Exhibit 4.12 of the Company’s Current Report on Form 8-K, filed with the SEC on March 21, 2023.
4.13 Form of Warrant of the registrant granted to Mast Hill Fund, L.P., for a transaction that closed and funded on March 15, 2023 is incorporated herein by reference to Exhibit 4.13 of the Company’s Current Report on Form 8-K, filed with the SEC on March 21, 2023.
4.14 Form of Warrant of the registrant granted to Mast Hill Fund L.P., dated March 30, 2023 is incorporated herein by reference to Exhibit 4.14 of the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2023.
4.15 Form of Secured Convertible Senior Note of the registrant sold and issued to Mast Hill Fund, L.P., for a transaction that closed and funded on April 28, 2023 is incorporated herein by reference to Exhibit 4.15 of the Company’s Current Report on Form 8-K, filed with the SEC on May 1, 2023.
4.16 Form of Warrant of the registrant granted to Mast Hill Fund, L.P., for a transaction that closed and funded on April 28, 2023 is incorporated herein by reference to Exhibit 4.16 of the Company’s Current Report on Form 8-K, filed with the SEC on May 1, 2023.
17
10.1 Securities Purchase Agreement by and between the Company and YAII PN, Ltd., dated May 14, 2020 is incorporated herein by reference to Exhibit 10.1 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.2 Registration Rights Agreement by and between the Company and YAII PN, Ltd., dated May 14, 2020 is incorporated herein by reference to Exhibit 10.2 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
16
10.3 Independent Contractor Agreement by and between Kona Gold LLC and OPTN Companies Inc., dated April 15, 2020 is incorporated herein by reference to Exhibit 10.3 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.4 Board of Directors Offer Letter between the Company and Matthew Crystal, dated July 24, 2018 is incorporated herein by reference to Exhibit 10.4 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
10.5 Board of Directors Offer Letter between the Company and William Jeffrey Outlaw, dated September 3, 2019 is incorporated herein by reference to Exhibit 10.5 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.6 Form of Distribution Agreement is incorporated herein by reference to Exhibit 10.6 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
10.7 Membership Interest Purchase Agreement by and among Elev8 Hemp LLC, PLAD, Inc., and the Company, dated October 10, 2016, is incorporated herein by reference to Exhibit 10.7 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.8 Securities Exchange and Settlement Agreement by and between Elev8 Brands, Inc., and the Company, dated March 6, 2018, is incorporated herein by reference to Exhibit 10.8 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.9 Securities Exchange and Settlement Agreement by and between Elev8 Brands, Inc., and the Company, dated November 26, 2019 is incorporated herein by reference to Exhibit 10.9 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.10 Employment Agreement by and between Christopher Selinger and the Company, dated September 1, 2018 is incorporated herein by reference to Exhibit 10.10 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
18
10.11 Lease Agreement by and between Kona Gold, LLC and Hay Investment Properties, Inc., dated June 1, 2018 is incorporated herein by reference to Exhibit 10.11 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.12 Triple Net Lease Agreement by and between Gold Leaf Distribution, LLC and 3090 S. Hwy 14, LLC, dated May 22, 2019 is incorporated herein by reference to Exhibit 10.12 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.13 Lease Modification Agreement by and between Gold Leaf Distribution, LLC and 3090 S. Hwy 14, LLC, dated April 21, 2020 is incorporated herein by reference to Exhibit 10.13 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.14 Line of Credit Agreement by and between Robert Clark and Gold Leaf Distribution, LLC, dated August 29, 2019 is incorporated herein by reference to Exhibit 10.14 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.15 Line of Credit Agreement by and between Robert Clark and Kona Gold, LLC, dated April 4, 2019 is incorporated herein by reference to Exhibit 10.15 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.16 Line of Credit Agreement by and between Matthew Nicoletti and Kona Gold, LLC, dated May 5, 2018 is incorporated herein by reference to Exhibit 10.16 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
17
10.17 Standard Promissory Note issued by Gold Leaf Distribution in favor of Robert Clark, dated February 19, 2019 is incorporated herein by reference to Exhibit 10.17 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
10.18 Standard Promissory Note issued by Kona Gold, LLC in favor of Robert Clark, dated January 15, 2019 is incorporated herein by reference to Exhibit 10.18 of Amendment No. 1 to the Company Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on October 26, 2020.
10.19 Employment Agreement by and between the Company and Robert Clark, dated August 12, 2015 is incorporated herein by reference to Exhibit 10.19 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
19
10.20 Employment Agreement by and between the Company and Lori Radcliffe, dated October 8, 2019 is incorporated herein by reference to Exhibit 10.20 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
10.20a Employment Agreement Amendment by and between the Company and Lori Radcliffe, dated September 14, 2021 is incorporated herein by reference to Exhibit 10.20a of the Company’s Registration Statement on Form S-1, filed with the SEC on September 22, 2021.

10.21 Amendment to Employment Agreement by and between the Company and Robert Clark, dated December 1, 2016 is incorporated herein by reference to Exhibit 10.21 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.22 Agreement by and between the Company and Ryan Dodd, dated May 1, 2019 is incorporated herein by reference to Exhibit 10.22 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.23 Amendment to Employment Agreement by and between Christopher Selinger and Kona Gold Solutions, Inc., dated May 1, 2020 is incorporated herein by reference to Exhibit 10.23of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.24 Amendment to Employment Agreement by and between Christopher Selinger and the Company, dated January 1, 2019 is incorporated herein by reference to Exhibit 10.24 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.25 Security Agreement by and between the Company and YAII PN, Ltd., dated May 14, 2020 is incorporated herein by reference to Exhibit 10.25 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.26 Line of Credit and Security Agreement Modification Agreement by and between Kona Gold LLC and Robert Clark, dated April 1, 2020 is incorporated herein by reference to Exhibit 10.26 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.27 Line of Credit and Security Agreement Modification Agreement by and between Gold Leaf Distribution LLC and Robert Clark, dated April 1, 2020 is incorporated herein by reference to Exhibit 10.27 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.
20
10.28 Terms of Oral Agreement between the Company and Robert Clark is incorporated herein by reference to Exhibit 10.28 of Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on October 26, 2020.

10.29 Waiver Agreement by and between the Company and YAII PN, Ltd., dated October 14, 2020, is incorporated herein by reference to Exhibit 10.29 of Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on October 26, 2020.
18
10.30 Paycheck Protection Promissory Note issued in favor of Wells Fargo Bank, N.A. dated May 4, 2020, is incorporated herein by reference to Exhibit 10.30 of Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on October 26, 2020.

10.31 Paycheck Protection Promissory Note issued in favor of Wells Fargo Bank, N.A. dated May 4, 2020, is incorporated herein by reference to Exhibit 10.31 of Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on October 26, 2020.
10.32 Securities Purchase Agreement by and between the Company and YAII PN, Ltd., dated November 30, 2020, is incorporated herein by reference to Exhibit 10.32 to the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on December 14, 2020.

10.33 Form of Securities Purchase Agreement between the registrant and YAII PN, Ltd., for a transaction that closed on February 11, 2021 is incorporated herein by reference to Exhibit 10.28 of the Company’s Current Report on Form 8-K, filed with the SEC on February 18, 2021.

10.34 Form of Registration Rights Agreement by and between the registrant and YAII PN, Ltd., for a transaction that closed on February 11, 2021 is incorporated herein by reference to Exhibit 10.29 of the Company’s Current Report on Form 8-K, filed with the SEC on February 18, 2021.

10.35 Form of Amended and Restated Security Agreement of the registrant and its subsidiaries in favor of YAII PN, Ltd., for a transaction that closed on February 11, 2021 is incorporated herein by reference to Exhibit 10.30 of the Company’s Current Report on Form 8-K, filed with the SEC on February 18, 2021.

10.36 Form of Intellectual Property Security Agreement of the registrant and its subsidiaries in favor of YAII PN, Ltd., for a transaction that closed on February 11, 2021 is incorporated herein by reference to Exhibit 10.31 of the Company’s Current Report on Form 8-K, filed with the SEC on February 18, 2021.

10.37 Form of Amended and Restated Global Guaranty Agreement of the registrant and its subsidiaries in favor of YAII PN, Ltd., for a transaction that closed on February 11, 2021 is incorporated herein by reference to Exhibit 10.32 of the Company’s Current Report on Form 8-K, filed with the SEC on February 18, 2021.
21
10.38 Form of Securities Purchase Agreement between the registrant and YAII PN, Ltd., for a transaction that closed and funded on August 23, 2021 is incorporated herein by reference to Exhibit 10.38 of the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2021.

10.39 Form of Registration Rights Agreement by and between the registrant and YAII PN, Ltd., for a transaction that closed and funded on August 23, 2021 is incorporated herein by reference to Exhibit 10.39 of the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2021.

10.40 Form of Second Amended and Restated Security Agreement of the registrant and its subsidiaries in favor of YAII PN, Ltd., for a transaction that closed and funded on August 23, 2021 is incorporated herein by reference to Exhibit 10.40 of the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2021.

10.41 Form of Intellectual Property Security Agreement of the registrant and its subsidiaries in favor of YAII PN, Ltd., for a transaction that closed and funded on August 23, 2021 is incorporated herein by reference to Exhibit 10.41 of the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2021.

10.42 Form of Second Amended and Restated Global Guaranty Agreement of the registrant and its subsidiaries in favor of YAII PN, Ltd., for a transaction that closed and funded on August 23, 2021 is incorporated herein by reference to Exhibit 10.42 of the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2021.
19
10.43 Agreement of Lease by and between Gold Leaf Distribution, LLC and RFMD-SC, LLC, dated August 30, 2021 is incorporated herein by reference to Exhibit 10.43 of the Company’s Registration Statement on Form S-1, filed with the SEC on September 22, ~~2021~~2021..

10.44 Form of Securities Purchase Agreement between the registrant and YAII PN, Ltd., for a transaction that closed and funded on May 4, 2022 is incorporated herein by reference to Exhibit 10.44 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022.
10.45 Form of Security Agreement of the registrant and its subsidiaries in favor of YAII PN, Ltd., for a transaction that closed and funded on May 4, 2022 is incorporated herein by reference to Exhibit 10.45 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022.

10.46 Form of Intellectual Property Security Agreement of the registrant and its subsidiaries in favor of YAII PN, Ltd., for a transaction that closed and funded on May 4, 2022 is incorporated herein by reference to Exhibit 10.46 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022.
22
10.47 Form of Global Guaranty Agreement of the registrant and its subsidiaries in favor of YAII PN, Ltd., for a transaction that closed and funded on May 4, 2022 is incorporated herein by reference to Exhibit 10.47 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022.

10.48 Form of Securities Purchase Agreement between the registrant and Mast Hill Fund, L.P., for a transaction that closed and funded on July 29, 2022 is incorporated herein by reference to Exhibit 10.48 of the Company’s Current Report on Form 8-K, filed with the SEC on August 3, 2022.

10.49 Form of Security Agreement of the registrant and its subsidiaries in favor of Mast Hill Fund, L.P., for a transaction that closed and funded on July 29, 2022 is incorporated herein by reference to Exhibit 10.49 of the Company’s Current Report on Form 8-K, filed with the SEC on August 3, 2022.
10.50 Revenue Purchase Agreement between the registrant and NewCo Capital Group VI, LLC, effective as of September 30, 2022 is incorporated herein by reference to Exhibit 10.50 of the Company’s Amended Registration Statement on Form S-1 (File No.: 333-267199), filed with the SEC on October 14, 2022.

10.51*10.51 Revenue Purchase Agreement between the registrant and Cobalt Funding Solutions effective as of November 2, 2022 is incorporated ~~herein.~~herein by reference to Exhibit 10.51 of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2022, filed with the SEC on November 14, 2022.
10.52 Equity Purchase Agreement between the registrant and Mast Hill Funds L.P., dated as of March 30, 2023 is incorporated herein by reference to Exhibit 10.52 of the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2023.
10.53 Registration Rights Agreement between the registrant and Mast Hill Funds L.P., dated as of March 30, 2023 is incorporated herein by reference to Exhibit 10.53 of the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2023.
10.54 Form of Securities Purchase Agreement between the registrant and Mast Hill Fund, L.P., for a transaction that closed and funded on March 15, 2023 is incorporated herein by reference to Exhibit 10.52 of the Company’s Current Report on Form 8-K, filed with the SEC on March 21, 2023.
10.55 Form of Security Agreement of the registrant and its subsidiaries in favor of Mast Hill Fund, L.P., for a transaction that closed and funded on March 15, 2023 is incorporated herein by reference to Exhibit 10.53 of the Company’s Current Report on Form 8-K, filed with the SEC on March 21, 2023.
10.56 Form of Securities Purchase Agreement between the registrant and Mast Hill Fund, L.P., for a transaction that closed and funded on April 28, 2023 is incorporated herein by reference to Exhibit 10.56 of the Company’s Current Report on Form 8-K, filed with the SEC on May 1, 2023.
10.57 Form of Security Agreement of the registrant and its subsidiaries in favor of Mast Hill Fund, L.P., for a transaction that closed and funded on April 28, 2023 is incorporated herein by reference to Exhibit 10.57 of the Company’s Current Report on Form 8-K, filed with the SEC on May 1, 2023.

21.1 List of subsidiaries of the registrant is incorporated herein by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K, filed with the SEC on April 15, 2021.

31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* ~~Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* ~~Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

101.INS* Inline XBRL Instance Document

101.SCH* Inline XBRL Taxonomy Extension Schema Document

101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

*Filed herewith

2023
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
KONA GOLD BEVERAGE, INC.

November 14, ~~2022~~2023 By: /s/ Robert Clark

Robert Clark
Chief Executive Officer
~~November 14, 2022~~ ~~By:~~ ~~/s/ Lori Radcliffe~~
~~Lori Radcliffe~~
~~Chief Financial Officer~~
2124


	September 30, 2022			December 31, 2021
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	270,793		$	703,825
Accounts receivable, net of allowance for doubtful accounts of $20,661 and $11,926, respectively		56,105			15,993
Inventory, net of reserve for obsolescence of $150,000 and $150,000, respectively		1,007,879			574,811
Prepaids		-			278,707
Other current assets		17,898			30,373
Total current assets		1,352,675			1,603,709

NON-CURRENT ASSETS
Property, plant and equipment, net		370,518			348,037
Right-of-use asset, net		823,635			966,955
Intangible property, net		68,639			75,955
Deposits		15,125			15,125
Total assets	$	2,630,592		$	3,009,781

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,041,016		$	541,123
Accrued compensation		159,583			329,583
Notes payable, net of discount of $155,281 and $0, respectively, current		479,260			7,974
Notes payable - related parties, current		1,787,151			6,000
Acquisition obligations, current		663,871			60,000
Lease liabilities, current		217,166			213,837
Convertible debt, net of discount of $564,416 and $2,150,067, respectively		530,584			849,933
Derivative liability		352,000			2,121,000
Total current liabilities		5,230,631			4,129,450

NON-CURRENT LIABILITIES
Notes payable - related parties, net of current		-			1,525,651
Notes payable, net of current		71,749			25,338
Acquisition obligations, net of current		-			615,317
Lease liabilities, net of current		677,866			838,883
Total liabilities		5,980,246			7,134,639

COMMITMENTS AND CONTINGENCIES		-			-

STOCKHOLDERS’ DEFICIT
Preferred Stock, $.00001 par value, 5,700,250 shares authorized, 988,000 and 988,000 issued and outstanding, respectively		10			10
Common Stock, $.00001 par value, 2,500,000,000 authorized, 1,806,458,236 and 1,004,709,546, issued and outstanding, respectively		18,065			10,047
Common stock issuable (170,000,000 and 170,000,000 shares)		1,386,497			1,386,497
Additional paid-in capital		17,688,091			10,778,761
Accumulated deficit		(22,442,317	)		(16,300,173	)
Total stockholders’ deficit		(3,349,654	)		(4,124,858	)
Total liabilities and stockholders’ deficit	$	2,630,592		$	3,009,781

	September 30, 2022		September 30, 2021
Warrants		278,333,333		170,000,000
Common stock equivalent of Series B Convertible Preferred Stock		488,000		488,000
Common stock equivalent of Series C Convertible Preferred Stock		-		140
Common stock equivalent of Series D Convertible Preferred Stock		500,000		500,000
Common stock issuable		169,999,860		170,000,000
Common stock on convertible debentures and accrued interest		333,838,293		209,812,295
Total		783,159,486		550,800,435

	September 30, 2023		September 30, 2022
Warrants		448,859,099		278,333,333
Common stock equivalent of Series B Convertible Preferred Stock		488,000		488,000
Common stock equivalent of Series C Convertible Preferred Stock		1,000		-
Common stock equivalent of Series D Convertible Preferred Stock		500,000,000		500,000
Common stock issuable		169,998,860		169,999,860
Restricted common stock		9,600,000		333,838,293
Common stock on convertible debentures and accrued interest		1,228,147,778		783,159,486
Total		2,357,094,737		278,333,333
Anti-dilutive Shares		2,357,094,737		278,333,333

	September 30, 2022			December 31, 2021
Furniture and Fixtures	$	79,965		$	75,070
Computers and Software		33,191			29,196
Machinery & Equipment		116,754			108,799
Vehicles		311,747			239,093
Total cost		541,657			452,158
Accumulated depreciation		(171,139	)		(104,121	)
Property, plant and equipment, net	$	370,518		$	348,037

	September 30, 2023			December 31, 2022
Furniture and Fixtures	$	78,944		$	78,134
Computers and Software		36,667			36,667
Machinery & Equipment		118,616			118,003
Vehicles		310,348			310,348
Total cost		544,575			543,152
Accumulated depreciation		(265,441	)		(195,088	)
Property, plant and equipment, net	$	279,134		$	348,064

Year Ending	Amortization		Amortization
2022 (remaining)	$	2,438
2023		9,754
2023 (remaining)			$	2,044
2024		9,754		8,175
2025		9,754		8,175
2026		9,754		8,175
2027				8,175
Thereafter		27,185		12,262
Total	$	68,639	$	47,006

	(a)	On April 4, 2019, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $1,500,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on April 4, ~~2023~~2024, at which time all outstanding principal amounts and accrued interest are due and payable. During the nine months ending September 30, 2023, Mr. Clark absolved $42,151. At September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, outstanding principal was $~~1,352,651~~1,310,500 and $1,352,651, respectively.

	(b)	On May 6, 2022, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $300,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on May 6, ~~2023~~2024, at which time all outstanding principal amounts and accrued interest are due and payable. During the period ended September 30, 2023, Mr. Clark made additional advances of $217,000, and $132,000 of that was repaid by the end of the period. At September 30, 2023 and December 31, 2022, ~~the~~ outstanding principal was $345,000 and $260,000., respectively.

	(c)	On August 29, 2019, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $200,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on August 29, 2023, at which time all outstanding principal amounts and accrued interest are due and payable. At September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, outstanding principal was $125,500 and $125,500, respectively.

	(d)	On February 19, 2019, the Company issued an unsecured Standard Promissory Note in Favor of Robert Clark, as lender, in the original principal amount of $70,000. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The note bears no interest. Principal payments of $500 per month commenced in March 2019, with final payment due in March 2021. On March 15, 2022, the Company issued an Amendment to the original issued Standard Promissory Note in Favor of Robert Clark for the remaining outstanding principal of $58,000. On April 3, 2023, the Company issued an Amendment to the original issued Standard Promissory Note in Favor of Robert Clark for the remaining outstanding principal of $46,000Principal payment of $500 per month, with final payment due in March ~~2023~~2024. The outstanding principal balance of this note at December 31, ~~2021~~2022 was $~~53,500~~47,500. During the nine months ended September 30, ~~2022,~~2023, the Company received an additional amount of $5,000 and made principal payments of $4,500, leaving an outstanding principal balance of $~~49,000~~48,000 at September 30, ~~2022.~~2023.


	(b)	On September 30, 2022, the Company financed the purchase of a vehicle for $46,576, after making a down payment. The loan term is for 60 months, annual interest rate of 9.44%, with monthly principal and interest payments of $980, and secured by the purchased vehicle. ~~As of~~At December 31, 2022, the loan balance was $44,550. During the nine months ended September 30, ~~2022,~~ no2023, the Company made principal payments ~~were made,~~of $4,820, leaving a loan balance of $~~46,576~~39,730 at September 30, ~~2022, of which $1,846~~ ~~was recorded as the current portion of loan payable on the accompanying Condensed Consolidated Balance Sheet.~~2023.


	(d)	On September 30, 2022, the Company entered into a secured non-interest bearing advance agreement with an unaffiliated third party for the purchase of future receipts/revenues. Under the agreements, the Company received a lump sum payment of $~~250,000, and in return, the lender receives a secured right to collect a fix sum of future receipts/revenue of $340,000~~ to be collected by the Company. In accordance with the agreement, the Company agreed to sell, assign and transfer to the Purchaser of all the Company’s payments, receipts, settlements and funds paid to or received by or for the account of the Company from time to time on and after the date hereof in payment or settlement of the Company’s existing and future accounts, payment intangibles, credit, debit and/or stored value card transactions, contract rights and other entitlements arising from or relating to the payment of monies from the Company’s customers and/or other payors or obligors. The loan is payable in weekly payments of $~~7,728~~, is secured by these assets described above, and is guaranteed by Robert Clark, the Company’s Chief Executive Officer. Upon execution of the advance and receipt of funds, the Company recorded the difference of $~~90,000~~ ~~between the cash collected and the face amount of the note as a note discount, and will amortize the note discount as interest expense over the life of the advance.~~

	~~(e)~~	On March 25, 2022, the Company entered into a secured debenture with an otherwise unaffiliated individual in the principal amount of $250,000. that was due on March 23, 2023. On March 23, 2023, the Company entered into a First Amendment to Secured Debenture (the “First Amendment”) to amend a Secured Debenture (the “Debenture”), dated as of March 25, 2022. The ~~secured note payable matures on~~Debenture is amended and restated in its entirety with the following terms (i) maturity date was extended to March 24, ~~2023~~2024; (ii) interest accrues on the outstanding principal at a rate equal to 12% per annum; (iii) monthly payments of principal and interest shall be made in the amount of $22,212, ~~and bears~~starting April 24, 2023 until the maturity date, at which date the entirety of the balance of principal plus interest ~~at the rate of~~ ~~0.97~~ ~~percent per annum.~~is due. The secured debenture is secured by nine ~~(9)~~ identified motor vehicles of the Company. At December 31, 2022, the outstanding balance of the secured debentures amounted to $250,000. During the nine months ended September 30, 2023, the Company made principal payments of $44,424, leaving a loan balance of $ 205,576 at September 30, 2023.

	In connection with the issuance of the original debenture in 2022, the Company issued to the lender 25 million shares of the Company’s common stock at a price of $0.004 per share. The Company determined the fair value of the 25 million shares was $135,000, which was recorded as a debt discount against the secured debenture. ~~As of September 30,~~At December 31, 2022, ~~the outstanding balance of the secured debentures amounted to $250,000~~ ~~and~~ the unamortized debt discount was $~~65,281~~31,531. During the nine months ended September 30, 2023, the Company amortized debt discount of $31,531 to interest expense on the loan, leaving no remaining unamortized debt discount at September 30, 2023.

(h)	On June 30, 2023, the Company entered into a note payable with IQ Financial, Inc. in the principal amount of $110,000, with an original issue discount of $10,000, resulting in net proceeds for $100,000. The note has no stated interest and is due on July 31, 2023. For so long as the note remains unpaid, the Company shall pay within two days of receipt of customer payments on specific customer invoices listed in the note payable. At September 30, 2023, there was no outstanding balance.

	The original issue discount of $10,000 was recorded as a debt discount against the note payable, at September 30, 2023, there was no remaining unamortized debt discount.

(i)	On May 15, 2023, the Company entered into a Revolving Credit Agreement (the “Revolver”) with a vendor. The Revolver allows the Company to purchase goods from its vendor time to time. The unpaid principal balance of the Revolver may not exceed $250,000 through May 31, 2023, $225,000 through July 31, 2023, and $200,000 through $200,000 through December 31, 2023, at any one time. The Revolver has a maturity date of December 31, 2023 and bears no interest rate. At September 30, 2023, the outstanding balance of the Revolver was $289,406.

	In connection with the issuance of the Revolver, the Company issued to the vendor 28 million shares of the Company’s common stock at a price of $0.0045 per share. The Company determined the fair value of the 28 million shares was $126,000, which was recorded as financing costs in the ~~current portion~~condensed consolidated statement of ~~loan payable on~~operations during the ~~accompanying Condensed Consolidated Balance Sheets.~~nine months ended September 30, 2023.

	September 30, 2022			December 31, 2021

YA II PN, Ltd.	$	500,000		$	3,000,000
Mast Hill		595,000			-
Secured debentures		1,095,000			3,000,000
Less debt discount		(564,416	)		(2,150,067	)
Secured debentures, net	$	530,584		$	849,933

	September 30, 2023			December 31, 2022

Mast Hill Note 1		119,306			595,000
Mast Hill Note 2		431,744			-
Mast Hill Note 3		230,000			-
Mast Hill Note 4		55,707			-
Mast Hill Note 5		63,000			-
Mast Hill Note		63,000			-
Less debt discount		(236,783	)		(183,940	)
Secured debentures, net	$	662,974		$	411,060

	At September 30, 2022			Remaining 2022			New Derivative 2022			At December 31, 2021

Stock Price	$	0.0060		$	.0120		$	.0168		$	0.0052
Exercise Price	$	0.0048		$	.0062		$	.0082		$	0.0039
Expected Life (Years)		0.59			0.34			1.00			0.74
Volatility		172	%		171	%		132	%		95	%
Dividend Yield		0	%		0	%		0	%		0	%
Risk-Free Interest Rate		4.05	%		1.72	%		2.16	%		0.39	%

Fair value:
Conversion feature	$	352,000		$	3,972,000		$	680,000		$	2,121,000

Years Ending December 31,	Amount			Amount
2022 (remaining)	$	77,686
2023		282,347
2023 (remaining)				$	57,521
2024		262,715			197,491
2025		261,083			170,059
2026 and thereafter		198,217
2026					113,790
2027 and thereafter					-
Total payments		1,082,048			538,861
Less: Amount representing interest		(187,016	)		(63,804	)
Present value of net minimum lease payments		895,032			475,057
Less: Current portion		(217,166	)		(178,074	)
Non-current portion	$	677,866		$	296,983

			Weighted
	Number		Average
	of		Exercise
	Warrants		Price
Balance outstanding, December 31, 2021		170,000,000	$	0.0300
Warrants granted		108,333,333		0.0065
Warrants exercised		-		-
Warrants expired or forfeited		-		-
Balance outstanding, September 30, 2022		278,333,333	$	0.0223
Balance exercisable, September 30, 2022		278,333,333	$	0.0223

		Outstanding						Exercisable					Outstanding						Exercisable
Exercise Price Per Share	Exercise Price Per Share	Shares		Life (Years)		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Exercise Price Per Share	Shares		Life (Years)		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
$	0.0045		100,000,000		4.83	$	0.0045		100,000,000	$	0.0045	0.0030 - 0.0048		290,525,766		4.49	$	0.0043		290,525,766	$	0.0043
$	0.03		158,333,333		1.76	$	0.03		158,333,333	$	0.03	0.03		158,333,333		1.01	$	0.03		158,333,333	$	0.03
$	0.05		20,000,000		0.62	$	0.05		20,000,000	$	0.02
			278,333,333		2.78	$	0.03		278,333,333	$	0.03			448,859,099		3.17	$	0.0146		448,859,099	$	0.0146

	●	Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans;

	●	Our failure to earn revenues or profits;

	●	Volatility or decline of our stock price;

	●	Potential fluctuation in our financial results;

	●	Rapid and significant changes in markets;

	●	Litigation with or legal claims and allegations by outside parties;

	●	Impacts from the COVID-19 pandemic; and

	●	Insufficient revenues to cover operating costs.

	September 30, 2022			December 31, 2021

Note payable – related party (a)	$	1,352,651		$	1,352,651
Note payable – related party (b)		260,000			-
Note payable – related party – past due (c)		125,500			125,500
Note payable – related party (d)		49,000			53,500
Total notes payable – related parties		1,787,151			1,531,651
Notes payable – related parties, current portion		(1,787,151	)		(6,000	)
Notes payable – related parties, net of current portion	$	-		$	1,525,651

	~~(a)~~	On April 4, 2019, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $1,500,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on April 4, 2023, at which time all outstanding principal amounts and accrued interest are due and payable. At September 30, 2022 and December 31, 2021, outstanding principal was $1,352,651 and $1,352,651, respectively.

	~~(b)~~	On May 6, 2022, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $300,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on May 6, 2023, at which time all outstanding principal amounts and accrued interest are due and payable. At September 30, 2022, the outstanding principal was $260,000.

	~~(c)~~	On August 29, 2019, the Company entered into an unsecured Line of Credit Agreement with Robert Clark. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The agreement established a revolving line of credit in the amount of up to $200,000. Advances under this line of credit bear interest at the rate of 3.75 percent per annum. The line of credit matures on August 29, 2023, at which time all outstanding principal amounts and accrued interest are due and payable. At September 30, 2022 and December 31, 2021, outstanding principal was $125,500 and $125,500, respectively.

	~~(d)~~	On February 19, 2019, the Company issued an unsecured Standard Promissory Note in Favor of Robert Clark, as lender, in the original principal amount of $70,000. Mr. Clark is the Company’s President, Chief Executive Officer, Secretary, and Chairman of the Board. The note bears no interest. Principal payments of $500 per month commenced in March 2019, with final payment due in March 2021. On March 15, 2022, the Company issued an Amendment to the original issued Standard Promissory Note in Favor of Robert Clark for the remaining outstanding principal of $58,000. Principal payment of $500 per month, with final payment due in March 2023. The outstanding principal balance of this note at December 31, 2021 was $53,500. During the nine months ended September 30, 2022, the Company made principal payments of $4,500, leaving an outstanding principal balance of $49,000 at September 30, 2022.

(d)	On March 25, 2022, the Company entered into a secured debenture with an otherwise unaffiliated individual in the principal amount of $250,000 that was due on March 23, 2023. On March 23, 2023, the Company entered into a First Amendment to Secured Debenture (the “First Amendment”) to amend a Secured Debenture (the “Debenture”), dated as of March 25, 2022. The Debenture is amended and restated in its entirety with the following terms (i) maturity date was extended to March 24, 2024; (ii) interest accrues on the outstanding principal at a rate equal to 12% per annum; (iii) monthly payments of principal and interest shall be made in the amount of $22,212, starting April 24, 2023 until the maturity date, at which date the entirety of the balance of principal plus interest is due. The secured debenture is secured by nine identified motor vehicles of the Company. At December 31, 2022, the outstanding balance of the secured debentures amounted to $250,000. During the nine months ended September 30, 2023, the Company made principal payments of $44,424, leaving a loan balance of $ 205,576 at September 30, 2023.

	~~(d)~~In connection with the issuance of the original debenture in 2022, the Company issued to the lender 25 million shares of the Company’s common stock at a price of $0.004 per share. The Company determined the fair value of the 25 million shares was $135,000, which was recorded as a debt discount against the secured debenture. At December 31, 2022, the unamortized debt discount was $31,531. During the nine months ended September 30, 2023, the Company amortized debt discount of $31,531 to interest expense on the loan, leaving no remaining unamortized debt discount at September 30, 2023.

(i)	On May 15, 2023, the Company entered into a Revolving Credit Agreement (the “Revolver”) with a vendor. The Revolver allows the Company to purchase goods from its vendor time to time. The unpaid principal balance of the Revolver may not exceed $250,000 through May 31, 2023, $225,000 through July 31, 2023, and $200,000 through $200,000 through December 31, 2023, at any one time. The Revolver has a maturity date of December 31, 2023 and bears no interest atrate. At September 30, 2023, the ~~rate of 0.97 percent per annum. The secured debenture is secured by nine (9) identified motor vehicles~~outstanding balance of the ~~Company.~~ Revolver was $289,406.

	In connection with the issuance of the ~~debenture,~~Revolver, the Company issued to the ~~lender 25~~vendor 28 million shares of the Company’s common stock at a price of ~~$0.004~~$0.0045 per share. The Company determined the fair value of the 2528 million shares was ~~$135,000,~~$126,000, which was recorded as ~~a debt discount against~~financing costs in the ~~secured debenture. As~~condensed consolidated statement of operations during the nine months ended September 30, ~~2022,~~2023.

	For the Nine Months Ended September 30, 2022
Net cash used in operating activities	$	(2,148,853	)
Net cash used in investing activities	$	(42,923	)
Net cash provided by financing activities	$	1,758,474

	For the Nine Months Ended September 30, 2023
Net cash provided by operating activities	$	(28,724	)
Net cash provided by investing activities	$	8,475
Net cash provided by financing activities	$	350,392

	1.	Identifying the contract(s) or agreement(s) with a customer;

	2.	Identifying the separate performance obligations in the contract or agreement;

	3.	Determining the transaction price;

	4.	Allocating the transaction price to the separate performance obligations in the contract or agreement; and

	5.	Recognizing revenue as each performance obligation is satisfied.

3.1	Amended and Restated Certificate of Incorporation is incorporated herein by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

3.2	Amended and Restated By-Laws is incorporated herein by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

3.3	Certificate of Designation of the Preferences, Rights, and Limitations of the Series B Preferred Stock is incorporated herein by reference to Exhibit 3.3 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

3.4	Certificate of Designation of the Preferences, Rights, and Limitations of the Series C Preferred Stock is incorporated herein by reference to Exhibit 3.4 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

3.5	Certificate of Designation of the Preferences, Rights, and Limitations of the Series D Preferred Stock is incorporated herein by reference to Exhibit 3.5 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.


3.7	Certificate of Amendment to the amended and restated Certificate of Incorporation is incorporated herein by reference to Exhibit 3.7 of the Company’s Current Report on Form 8-K, filed with the SEC on February 17, 2023.

3.8	Certificate of Amendment to the amended and restated Certificate of Incorporation is incorporated herein by reference to Exhibit 3.8 of the Company’s Current Report on Form 8-K, filed with the SEC on February 17, 2023.

4.1	Form of Debenture is incorporated herein by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

4.2	Warrant is incorporated herein by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

4.3	Form of Stand-alone Debenture is incorporated herein by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-1 (File No.333-239883), filed with the SEC on December 14, 2020.

4.4	Form of Secured Convertible Debenture of the registrant sold and issued to YAII PN, Ltd., on February 11, 2021 is incorporated herein by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K, filed with the SEC on February 18, 2021.

4.4a	Form of Secured Convertible Debenture of the registrant sold and issued to YAII PN, Ltd., on February 11, 2021 is incorporated herein by reference to Exhibit 4.4a of the Company’s Quarterly ~~Current~~ Report on Form 10-Q, filed with the SEC on November 15, 2021.

4.5	Form of Warrant of the registrant granted to YAII PN, Ltd., on February 11, 2021 is incorporated herein by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K, filed with the SEC on February 18, 2021.

4.6	Form of Secured Convertible Debenture of the registrant sold and issued to YAII PN, Ltd., effective August 23, 2021 is incorporated herein by reference to Exhibit 4.6 of the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2021.

4.7	Form of Warrant of the registrant granted to YAII PN, Ltd., effective August 23, 2021 is incorporated ~~herein~~here8in by reference to Exhibit 4.7 of the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2021.

4.8	Form of Secured Convertible Debenture of the registrant sold and issued to YAII PN, Ltd., effective May 4, 2022 is incorporated herein by reference to Exhibit 4.8 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022.

4.9	Form of Warrant of the registrant granted to YAII PN, Ltd., effective May 4, 2022 is incorporated herein by reference to Exhibit 4.9 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022.

4.10	Form of Secured Convertible Senior Note of the registrant sold and issued to Mast Hill Fund, L.P., dated July 28, 2022 is incorporated herein by reference to Exhibit 4.10 of the Company’s Current Report on Form 8-K, filed with the SEC on August 3, 2022.

4.11	Form of Warrant of the registrant granted to Mast Hill Fund, L.P., dated July 28, 2022 is incorporated herein by reference to Exhibit 4.11 of the Company’s Current Report on Form 8-K, filed with the SEC on August 3, 2022.

4.12	Form of Secured Convertible Senior Note of the registrant sold and issued to Mast Hill Fund, L.P., for a transaction that closed and funded on March 15, 2023 is incorporated herein by reference to Exhibit 4.12 of the Company’s Current Report on Form 8-K, filed with the SEC on March 21, 2023.

4.13	Form of Warrant of the registrant granted to Mast Hill Fund, L.P., for a transaction that closed and funded on March 15, 2023 is incorporated herein by reference to Exhibit 4.13 of the Company’s Current Report on Form 8-K, filed with the SEC on March 21, 2023.

4.14	Form of Warrant of the registrant granted to Mast Hill Fund L.P., dated March 30, 2023 is incorporated herein by reference to Exhibit 4.14 of the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2023.

4.15	Form of Secured Convertible Senior Note of the registrant sold and issued to Mast Hill Fund, L.P., for a transaction that closed and funded on April 28, 2023 is incorporated herein by reference to Exhibit 4.15 of the Company’s Current Report on Form 8-K, filed with the SEC on May 1, 2023.

4.16	Form of Warrant of the registrant granted to Mast Hill Fund, L.P., for a transaction that closed and funded on April 28, 2023 is incorporated herein by reference to Exhibit 4.16 of the Company’s Current Report on Form 8-K, filed with the SEC on May 1, 2023.

10.1	Securities Purchase Agreement by and between the Company and YAII PN, Ltd., dated May 14, 2020 is incorporated herein by reference to Exhibit 10.1 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.2	Registration Rights Agreement by and between the Company and YAII PN, Ltd., dated May 14, 2020 is incorporated herein by reference to Exhibit 10.2 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.3	Independent Contractor Agreement by and between Kona Gold LLC and OPTN Companies Inc., dated April 15, 2020 is incorporated herein by reference to Exhibit 10.3 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.

10.4	Board of Directors Offer Letter between the Company and Matthew Crystal, dated July 24, 2018 is incorporated herein by reference to Exhibit 10.4 of the Company’s Registration Statement on Form S-1 (File No.: 333-239883), filed with the SEC on July 16, 2020.